Angling for clients, Schwab cuts fees
NEW YORK - Charles Schwab Corp., the largest independent brokerage by client assets, will cut management fees on 24 equity and bond mutual funds with a total of about $20 billion in assets as it seeks to draw business from rivals.
Fees on the $4.6 billion Schwab Standard & Poor's 500 Index Fund will drop as much as 75 percent, and by as much 41 percent on the $3.7 billion Schwab 1000 Index Fund, the San Francisco company said yesterday.
Schwab also hopes to gain regulatory approval to introduce its own line of exchange-traded funds by the end of the year.
Schwab is seeking to draw new customers after the worst year for the S&P 500 in seven decades eroded client assets. Schwab's S&P 500 fund, the company's largest equity index fund, has half as many assets as Boston-based Fidelity Investments' fund and less than a 10th of the total in Vanguard Group Inc.'s 500 Index Fund.
"We're taking on what are some of the leaders of the pack," said Randall Merk, a Schwab executive vice president. "This is not just a temporary promotion, this is a permanent reduction in fees." All fees on six equity index funds will decline, effective immediately, to as low as 0.09 percent of assets. Overall, fees will fall an average of 54 percent, he said.
Schwab's new fees make the 500 Index fund cheaper than Vanguard's, yet still higher than the 0.07 percent charged by Fidelity, according to Bloomberg data. 