Schwab Reduces Minimums on Mutual Fund OneSource and Improves Access to Investing

Initial investment minimums drop to $100 from $2,500; minimum for subsequent investments fall to $1

Monday, November 16, 2015 7:00 am PST

Dateline:

SAN FRANCISCO

Public Company Information:

NYSE:
SCHW
"Mutual Fund OneSource was groundbreaking from the day it launched 23 years ago, and we’re proud to be able to continue to deliver meaningful new benefits to investors."

SAN FRANCISCO--(BUSINESS WIRE)--Beginning today, investors can invest in most1 mutual funds available on Mutual Fund OneSource® – Schwab’s no-transaction-fee mutual fund platform – for as little as $100 in initial investments in brokerage, IRA and custodial accounts. This new low minimum for brokerage accounts is a significant drop from $2,500. Additionally, investors will be able to make subsequent investments in established accounts for all funds available in Mutual Fund OneSource beginning at $1, down from $500.

With this change, Schwab will offer the widest selection of funds available at a $100 minimum, improving access to mutual funds for a greater number of individual investors and those who want to broaden their investments.

Mutual funds currently represent approximately 43% of the total assets at Schwab, and 42% of Schwab retail households are invested in mutual funds. Launched in July 1992 with eight fund families and more than 80 mutual funds, Schwab’s Mutual Fund OneSource —the industry’s first “mutual fund supermarket”— transformed the way America invests by simplifying how individuals buy and sell no-load mutual funds from multiple fund families without paying transaction fees. Today, Mutual Fund OneSource provides access to more than 500 fund families and 4,700 no-load, no-transaction-fee mutual funds, and is evolving by dramatically reducing the price of entry to purchase those funds.

“With today’s news, it has never been easier or more cost-efficient for investors to build a diversified portfolio of mutual funds,” said Doug Hanson, vice president at Charles Schwab and head of the company’s third-party mutual fund platforms. “Mutual Fund OneSource was groundbreaking from the day it launched 23 years ago, and we’re proud to be able to continue to deliver meaningful new benefits to investors.”

Benefits of Lower Minimums

Lower minimum investments are meaningful for more than just small or first-time investors, Hanson points out. Among the benefits of lower minimums:

  • By committing a smaller amount, they can help to alleviate investor concerns about market timing, especially in volatile markets
  • They can make it easier to branch out beyond a single asset-allocation fund solution
  • They can provide exposure to areas of the market that were previously inaccessible with smaller investment amounts
  • They can help investors who want to start – or continue – an Automatic Investment Plan. For example, someone could start with a $100 initial investment and continue with regular monthly investments of $100. Committing a smaller amount initially makes it easier to initiate a dollar-cost-averaging approach.

Evolution of a Groundbreaking Service

Mutual Fund OneSource is the foundation of Schwab’s Mutual Fund Marketplace®, which spans approximately 10,000 mutual funds, some of which may include a transaction fee.

For a snapshot of the history of Schwab’s mutual fund platforms, see the timeline below.

   
1984    

Launch of the Mutual Fund Marketplace, which offered no-load and load funds with a transaction fee

1990    

Mutual Funds Performance Guide® introduced, which includes performance information on all third party mutual funds available at Schwab

1992    
1993     Schwab introduces list of carefully pre-screened mutual funds called the Select List
1997    
  • Mutual Fund OneSource includes 125 fund companies, 800+ funds
  • Mutual Fund OneSource online launches with tools and resources. The Mutual Fund Report Card is introduced for thousands of funds, providing single-page synopsis for each fund
2002    
  • Mutual Fund OneSource includes 221 fund companies, 1,000+ funds
  • Sector funds added to Select List
2003    

The Select List evolves to become the Mutual Fund OneSource Select List® including only no-transaction-fee funds from the Mutual Fund OneSource service.

2005    

Launch of Schwab Mutual Fund Portfolio Builder, do-it-yourself online educational tool that offers a pre-set list of mutual funds from the Select List, allocated according to a client-selected risk profile

2006     Schwab launches SMP-MFs, offering professional money management for individuals with as little as $50,000 to invest. Portfolios are composed of funds from Mutual Fund OneSource.
2010     The Mutual Fund Select List Advisor Edition is launched for Registered Investment Advisors
2012     Mutual Fund OneSource celebrates its 20th Anniversary

2015

4,500+ funds offered via Mutual Fund OneSource from 500+ fund companies.

 

Nov.
2015

   

Initial minimum investments for most funds on the platform reduced to $100 from $2,500; subsequent minimums reduced to $1 from $500.

 

Tools and Services to Help Investors Select Mutual Funds

In addition to offering low investment minimums and a platform to buy mutual funds with no transaction fees, Schwab provides investors with a wide range of offerings to help with fund selection. They include:

  • Mutual Fund OneSource Select List®: Composed solely of no-transaction-fee funds from Mutual Fund OneSource, this quarterly list built by Charles Schwab Investment Advisory (CSIA) is designed to help investors make confident, informed investment decisions.
  • Income Mutual Fund Select List®: Designed to help investors achieve an income-producing portfolio with growth potential, this list includes approximately 40 funds from the taxable and tax-free bond fund and domestic and international equity fund categories.
  • Schwab Managed Portfolios-Mutual Funds: An investment advisory product where investors can choose from 12 model portfolios that would best match their time horizons, attitudes toward risk and tax sensitivity.
  • Schwab Mutual Fund Portfolio Builder®: Designed for self-directed clients who are looking for mutual fund investment ideas, but who are not looking for ongoing portfolio advice or help with rebalancing, this online self-service tool located on schwab.com generates a pre-set list of mutual funds based on risk profiles. It offers five model portfolios.
  • Automatic Investment Plan: This dollar-cost averaging strategy allows investors to automatically invest a fixed dollar amount to eligible mutual funds (other than the Schwab Money Funds) at regular intervals.
  • Mutual Fund Screening Tool: Use this tool to screen thousands of funds by category, fees, and ratings as well as help you select your mutual fund investments.

The Select List and the Income Select List are developed and managed by Charles Schwab Investment Advisory, Inc. (CSIA). Model portfolios for Schwab Managed Portfolios are constructed, managed and rebalanced by CSIA. Schwab Portfolios are designed by the Schwab Center for Financial Research (SCFR).

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 TwitterFacebookYouTube, and LinkedIn.

Through its operating subsidiaries, The Charles Schwab Corporation (NYSE:SCHW) provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, www.sipc.org), and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; compliance and trade monitoring solutions; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through Schwab Advisor Services. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides banking and lending services and products. More information is available at www.schwab.com and www.aboutschwab.com.

DISCLOSURES:

Investors should consider carefully information contained in the prospectus, including investment objectives, risks, charges, and expenses. You can obtain a prospectus by visiting schwab.com or calling 800-435-4000. Please read the prospectus carefully before investing.

Investment value will fluctuate, and shares, when redeemed, may be worth more or less than original cost. If an expense waiver was in place during the period, the net expense ratio was used to calculate fund performance.

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

Schwab's short-term redemption fee of $49.95 will be charged on redemption of funds purchased through Schwab's Mutual Fund OneSource® service (and certain other funds with no transaction fee) and held for 90 days or less. Schwab reserves the right to exempt certain funds from this fee, including Schwab Funds®, which may charge a separate redemption fee, and funds that accommodate short-term trading. For each of these trade orders placed through a broker, a $25 service charge applies. Funds are also subject to management fees and expenses.

Trades in no-load mutual funds available through Mutual Funds OneSource service (including Schwab Funds) as well as certain other funds, are available without transaction fees when placed through schwab.com or our automated phone channels. For each of these trade orders placed through a broker, a $25 service charge applies. Schwab reserves the right to change the funds we make available without transaction fees and to reinstate fees on any funds. Funds are also subject to management fees and expenses.

Charles Schwab & Co., Inc., member of SIPC, receives remuneration from fund companies for record keeping, shareholder services, and other administrative services for shares purchased through its Mutual Fund OneSource service. Schwab also may receive remuneration from transaction fee fund companies for certain administrative services.

© 2015 Charles Schwab & Co., Inc. Member SIPC.

(1115-6797)

1 Funds are not required to set their initial investment minimum at $100, so some asset managers may opt to set their funds’ initial investment minimums higher than $100.

Contact:

Charles Schwab
Alison Wertheim, 415-667-0475
alison.wertheim@schwab.com

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