Schwab to Launch First Global Real Estate Mutual Fund to Track a Fundamentally Weighted Index

Monday, September 8, 2014 6:00 am PDT



Public Company Information:

"We’re pleased to be the first firm that offers investors a low cost way to access this foundational asset class by using this approach."

SAN FRANCISCO--(BUSINESS WIRE)--Charles Schwab Investment Management, Inc. (CSIM) announced today that it will expand its index mutual fund lineup with the launch of the Schwab Fundamental Global Real Estate Index Fund (SFREX). The new fund is the only U.S.-based real estate fund to apply the Russell Fundamental Index® Series to a broad-based, global portfolio of real estate securities.

Managed by CSIM, the Schwab Fundamental Global Real Estate Index Fund will track the Russell Fundamental Global Select Real Estate Index. The index, which comprises more than 200 real estate companies in 20 countries, measures the performance of residential and commercial real estate companies and real estate investment trusts (REITs) in U.S. and non-U.S. markets, including developed and emerging markets, using a fundamentally weighted methodology. Products using fundamentally weighted strategies generally fall into the category of smart or strategic beta investing; they break the link with price by weighting securities based on economic factors such as adjusted sales, retained operating cash flow, and dividends plus buybacks, rather than by market capitalization.

“This new addition to Schwab’s index mutual fund family marries the diversification and dividend potential of global real estate with the intelligence of the Fundamental Index methodology, which we believe is a powerful combination,” said John Sturiale, Senior Vice President of Product Management at Charles Schwab & Co., Inc. “We’re pleased to be the first firm that offers investors a low cost way to access this foundational asset class by using this approach.”

In a whitepaper released today by the Schwab Center for Financial Research, Anthony Davidow, Alternative Beta and Asset Allocation Strategist, explores the role of global real estate within an investor’s portfolio and the rationale for gaining exposure to the asset class using fundamentally weighted indexing.

“Global real estate represents a valuable addition to a diversified asset allocation model and has historically delivered strong performance, attractive yields, and diversification benefits relative to traditional investments,” noted Davidow in his research. “Fundamentally weighted indexing can provide a great complement to traditional cap weighted indexing, and we think that applying these strategies to global real estate makes a lot of sense.”

The Schwab Fundamental Global Real Estate Index Fund will have a net operating expense ratio of 0.49 percent and is available for a $100 minimum investment. The subscription period for the fund will begin on September 8 and continues until October 21, 20141. For more information on how to subscribe, investors can call 877-870-7271 or visit The fund will be available for general purchase beginning October 22, 2014.

CSIM is the only asset manager to offer mutual funds and exchange-traded funds (ETFs) tracking the Russell Fundamental Index® Series, which is compiled and calculated by Russell Investments in conjunction with Research Affiliates LLC. Schwab launched its first Fundamental Index mutual funds in 2007 and its first Fundamental Index ETFs in 2013. These five mutual funds and six ETFs now have $7.1 billion in total assets under management as of July 31, 2014.

More information about Schwab’s line-up of Fundamental Index funds is available at or by calling 877-870-7271.

Fund Management

Agnes Hong, Managing Director and Head of Passive Equity Strategies for CSIM leads the portfolio management teams of Schwab's passive equity funds and ETFs, which comprise the Schwab Equity Index Funds, the Schwab Fundamental Index Funds, and the Schwab Equity ETFs. She also has overall responsibility for all aspects of the management of the funds. Ferian Juwono, Managing Director and Senior Portfolio Manager for CSIM, is responsible for the day-to-day co-management of the Schwab Fundamental Index Funds, Schwab Equity Index Funds, and the Schwab Equity ETFs.

About Charles Schwab Investment Management

Founded in 1989, Charles Schwab Investment Management, Inc. (CSIM), a subsidiary of The Charles Schwab Corporation, is one of the nation's largest asset management companies with $241.7 billion in assets under management as of July 31, 2014. It is among the country's largest money market fund managers and is the third-largest provider of retail index funds. In addition to managing Schwab’s proprietary funds, CSIM provides oversight for the sub-advised Laudus Fund family. CSIM currently manages 76 mutual funds, 22 of which are actively-managed funds, in addition to two separate account model portfolios, and 21 ETF offerings.

About 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 Follow us on Twitter, Facebook, YouTube, LinkedIn and our Schwab Talk blog.


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

The investment adviser and its affiliates have agreed to limit the total annual fund operating expenses (excluding interest, taxes and certain non-routine expenses) of the fund to 0.49% for so long as the investment adviser serves as the adviser to the fund. This agreement may only be amended or terminated with the approval of the fund’s Board of Trustees.

For the period October 21, 2014 through January 31, 2015, the investment advisor has agreed to waive the fund's net operating expenses to 0.00% (excluding interest, taxes, and certain non-routine expenses).

Investment value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost.

Diversification does not limit the risk of investment losses.

International investments involve additional risks, which include differences in financial accounting standards, currency fluctuations, geopolitical risk, foreign taxes and regulations, and the potential for illiquid markets. Investing in emerging markets may accentuate these risks.

Risks of investing in REITs are similar to those associated with direct ownership of real estate, such as changes in real estate values and property taxes, interest rates, cash flow of underlying real estate assets, supply and demand, and the management skill and credit worthiness.

Russell Investments (Russell) and Research Affiliates LLC (RA) have entered into a strategic alliance with respect to the Russell Fundamental Index Series. Subject to RA’s intellectual property rights in certain content, Russell is the owner of all copyrights related to the Russell Fundamental Index Series. Russell and RA jointly own all trademark and service mark rights in and to the Russell Fundamental Index Series. Schwab is not affiliated with Russell or RA. Schwab Fundamental Index Funds are not sponsored, endorsed, sold or promoted by Russell or RA, and Russell and RA do not make any representation regarding the advisability of investing in shares of the fund. Research Affiliates is the owner of certain intellectual property (see all applicable rights disclosures and notices at, which are fully incorporated herein.)

None of the Schwab Fundamental Index Funds are promoted, sponsored, or endorsed by, nor in any way affiliated with, Russell Investments or Research Affiliates, LLC. Russell Investments and Research Affiliates, LLC, are not responsible for and have not reviewed the Schwab Fundamental Index Funds nor any associated literature or publications, and Russell Investments and Research Affiliates, LLC, make no representations or warranties, express or implied, as to their accuracy, or completeness, or otherwise.

Charles Schwab Investment Management, Inc. ("CSIM"), the investment advisor for Schwab's proprietary funds, and Charles Schwab & Co., Inc. ("Schwab"), the distributor for Schwab Funds, are separate but affiliated companies and subsidiaries of The Charles Schwab Corporation. SCFR is a division of Charles Schwab & Co., Inc.

Schwab ETFs are distributed by SEI Investments Distribution Co. (SIDCO). SIDCO is not affiliated with the Charles Schwab Corporation or any of its affiliates.

1 Schwab is seeking investors for the fund during an initial offering period. As of the date of the prospectus, Schwab anticipates that this period will begin on September 8, 2014 and end on October 21, 2014, although the period may be extended or otherwise changed. During the initial offering period, orders may only be placed through Schwab. Payment for shares of the fund will not be accepted until the completion of the initial offering period. Orders received after the initial offering period will be executed at the next share price calculated for the fund.



Charles Schwab
Alissa Carter, 212-403-9240

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