Schwab Launches Schwab Personalized Indexing™

Rhea-AI Summary

Charles Schwab has introduced Schwab Personalized Indexing™, a direct indexing solution aimed at both retail investors and registered investment advisors. This service allows clients to directly own securities, enhancing tax management capabilities and portfolio customization. Initially, investors can choose from three index-based strategies starting at an account minimum of $100,000, which is lower than typical direct indexing offerings. Fees start at 0.40%, making it competitive in the market. Additional features and strategies are expected to roll out in the next 12-18 months.

Positive

• Launch of Schwab Personalized Indexing offers greater tax management and customization for investors.
• Lower account minimum of $100,000 compared to industry average of $250,000 enhances accessibility.
• Competitive fee structure starting at 0.40%, appealing to a wider range of investors.

Negative

• None.

WESTLAKE, Texas--(BUSINESS WIRE)-- Charles Schwab today announced Schwab Personalized Indexing™, a new direct indexing solution with powerful tax management and portfolio management capabilities, is now available to both registered investment advisors and retail investors. Schwab believes investors of all asset levels get the most value out of direct indexing with the help of an advisor or financial consultant. Clients interested in enrolling in Schwab Personalized Indexing will work with a Schwab financial consultant to open an account or talk to their Registered Investment Advisor. Investors can learn more about the product’s features at Schwab Personalized Indexing.

Schwab plans to roll out additional strategies, features and capabilities that will bring even more of the benefits of direct indexing — including greater customization — to retail investors and advisors over the next 12-18 months.

Unlike an index mutual fund or ETF, direct indexing involves direct ownership of securities and may offer a greater level of tax management for the investor. With Schwab Personalized Indexing, investors will initially have access to three index-based strategies, and they can restrict up to three securities. Schwab Personalized Indexing strategies and their respective indexes include: a U.S. Large Cap based on the Schwab 1000 Index®, a U.S. Small Cap based on the S&P SmallCap 600® Index, and an Environmental, Social and Governance (ESG) based on the oldest and highly regarded ESG index, the MSCI KLD 400 Social Index. Each strategy seeks index-like returns with enhanced after-tax benefits.

Each client account is optimized based on the current holdings and unrealized tax profile, with the portfolio management team considering factors such as taxes, risks and tracking error during portfolio construction and daily management. Schwab Personalized Indexing employs a proprietary optimization process that was built in-house at Schwab and includes automated monitoring of client portfolios and tax-loss harvesting technology that is managed by a team of investment professionals with more than two decades of direct indexing expertise.

Schwab Personalized Indexing launches with an account minimum of $100,000 — lower than most direct indexing offerings on the market which typically start at $250,000 or higher — yet at an account size that still provides the opportunity for meaningful tax benefits to the client. Starting at a fee of 0.40%, Schwab Personalized Indexing fees are competitive and lower than many direct indexing offers available to advisors and investors today.

About Schwab Asset Management

One of the industry’s largest and most experienced asset managers, Schwab Asset Management offers a focused lineup of competitively priced ETFs, mutual funds and separately managed account strategies designed to serve the central needs of most investors. By operating through clients’ eyes, and putting them at the center of our decisions, we aim to deliver exceptional experiences to investors and the financial professionals who serve them.

As of March 31, 2022, Schwab Asset Management managed approximately $658.6 billion in total assets under management. More information is available at www.schwabassetmanagement.com.

About Charles Schwab

At Charles Schwab we believe in the power of investing to help individuals create a better tomorrow. We have a history of challenging the status quo in our industry, innovating in ways that benefit investors and the advisors and employers who serve them, and championing our clients’ goals with passion and integrity.

More information is available at www.aboutschwab.com. Follow us on Twitter, Facebook, YouTube and LinkedIn.

Disclosures:

This information is not intended to be a substitute for specific individualized tax, legal or investment planning advice.

Neither the tax-loss harvesting strategy nor any discussion herein is intended as tax advice, and Schwab Asset Management does not represent that any particular tax consequences will be obtained. Tax-loss harvesting involves certain risks including unintended tax implications. Investors should consult with their tax advisors and refer to Internal Revenue Service (“IRS”) website at www.irs.gov about the consequences of tax-loss harvesting.

Diversification and asset allocation strategies do not ensure a profit and cannot protect against losses in a declining market.

Please refer to the Charles Schwab Investment Management, Inc. Disclosure Brochure for additional information.

Portfolio Management for Schwab Personalized Indexing is provided by Charles Schwab Investment Management, Inc., dba Schwab Asset Management, a registered investment adviser and an affiliate of Charles Schwab & Co., Inc. ("Schwab"). Both Schwab Asset Management and Schwab are separate entities and subsidiaries of The Charles Schwab Corporation.

There are risks associated with any investment approach, and each Schwab Personalized Indexing strategy and equity market segment has their own set of risks based on client strategy selection and further customization.

Environmental, social and governance (ESG) strategies implemented by mutual funds, exchange-traded funds (ETFs), and separately managed accounts are currently subject to inconsistent industry definitions and standards for the measurement and evaluation of ESG factors; therefore, such factors may differ significantly across strategies. As a result, it may be difficult to compare ESG investment products. An investment product’s ESG strategy may significantly influence its performance. Carefully review an investment product’s prospectus or disclosure brochure to learn more about how it incorporates ESG factors into its investment strategy.

There can be no assurance that the strategies will achieve their desired outcomes. Each investing strategy brings with it its own set of unique risks and benefits.

(0422-2EGE)

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Christine Hudacko

Charles Schwab

415-961-3790

Source: The Charles Schwab Corporation

FAQ

What is Schwab Personalized Indexing?

Schwab Personalized Indexing is a new direct indexing solution by Charles Schwab that offers enhanced tax management and portfolio customization for retail investors and registered advisors.

What are the minimum investment requirements for Schwab Personalized Indexing?

The minimum investment required to open an account with Schwab Personalized Indexing is $100,000.

What are the fees associated with Schwab Personalized Indexing?

Fees for Schwab Personalized Indexing start at 0.40%, which is competitive in the direct indexing market.

What index strategies does Schwab Personalized Indexing offer?

Schwab Personalized Indexing initially offers three index-based strategies including U.S. Large Cap, U.S. Small Cap, and an ESG-focused strategy.

When will additional features for Schwab Personalized Indexing be available?

Charles Schwab plans to roll out more strategies and features for Schwab Personalized Indexing over the next 12-18 months.