Skip navigation
Intelligent Advisor

Schwab's New Low-Cost Target Date Mutual Fund Built On ETFs

Charles Schwab Investment Management announced the launch of a series of index-based target date mutual funds on Thursday that the asset manager says are the lowest-cost target date mutual funds available to employer-sponsored retirement plans.

The new Target Index Funds, constructed with Schwab ETFs as the underlying investments, have an across-the-board expense ratio of eight basis points and no investment minimum, regardless of plan size.  Similar pricing on target date funds typically requires a $100 million minimum investment or more.

The Target Index Funds are also available to individual investors at 13 basis points with a minimum $100 investment.

Marie Chandoha, the president and chief executive of Charles Schwab Investment Management, said giving every retirement plan the same low price, regardless of size, is a step toward democratization for employers, retirement plan participants and self-directed individual investors.

“That means plan participants no longer have to pay for a more expensive target date fund just because they work at a smaller company,” Chandoha said. “On the retail side, we’re proud to offer individual investor a professionally managed retirement solution at an exceptionally low price.”

The low cost comes from the market-cap ETFs used, which Schwab claims have the lowest operating expenses in their respective Lipper categories. According to Schwab research, fees are top of mind when workers are deciding how to invest their retirement plans.

“At a time when some asset managers are inundating investors with confusing, complex products, we’re experiencing greater demand for our straightforward, transparent products that deliver great value on their own or with professional management built in,” Chandoha said. 

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.