Both mutual funds and exchange-traded funds (ETFs) offer diversification and professional investment management. ETFs can be traded around the clock on brokerage accounts, while mutual funds are generally only listed after the market closes. ETFs are generally considered to be a more tax-efficient vehicle than mutual funds. Both ETFs (exchange-traded funds) and mutual funds offer exposure to a wide variety of asset classes and niche markets.
They generally offer more diversification than a single stock or bond, and can be used to create a diversified portfolio when combining funds from several asset classes. Intraday trading, stop orders, limit orders, options and short selling are possible with ETFs, but not with mutual funds. ETFs and index mutual funds tend to be generally more tax-efficient than actively managed funds. And in general, ETFs tend to be more tax-efficient than index mutual funds.
Choose from more than 2000 commission-free ETFs1, including ETFs with Schwab's low-cost market capitalization indices. Charles Schwab's ETF %26 Co. Publicly-traded transactions can be traded without commission for buying and selling transactions made online in a Schwab account. Non-publicly traded ETFs are subject to a commission.
See the price guide for additional information. Schwab doesn't get paid to promote any particular ETF to its customers. Charles Schwab Investment Management, Inc. (CSIM), a subsidiary of Schwab, acts as an investment advisor to Schwab ETFs, which compensate CSIM with the applicable operating expense ratios.
The amount of the fees is indicated in the prospectus for each ETF. Schwab receives compensation from semi-transparent (also known as non-transparent) ETFs active from third parties or their sponsors for platform and technology support, shareholder communications, reporting and similar administrative services for active third-party semi-transparent ETFs available on Schwab. This fee may vary, but this is usually an asset-based share of 0.10% per annum of the assets held in Schwab. Neither the CSIM, the subsidiary of Schwab, nor the active semitransparent ETFs of Schwab pay a separate fee to Schwab for these services described, although the CSIM reimburses Schwab, in its capacity as a financial intermediary affiliated with the CSIMs, for the costs of Schwab resulting from providing certain professional, administrative and support services to Schwab ETFs.
Investment returns will fluctuate and will be subject to market volatility, so an investor's shares, when traded or sold, may be worth more or less than their original cost. Unlike mutual funds, ETF shares cannot be redeemed individually directly with the ETF. ETF shares are bought and sold at market prices, which may be higher or lower than the net asset value (NAV). CSIM), is the investment advisor for Schwab ETF.
Schwab ETFs are distributed by SEI Investments Distribution Co. SIDCO is not affiliated with CSIM or Charles Schwab %26 Co. Mutual funds can pay distributions at the end of the year, while ETFs can pay dividends throughout the year. However, there is a difference in these payments to investors, and ETF investors also have an advantage in this regard.