Schwab slashes ETF fees in bid for low-cost leadership

In early 2025, Charles Schwab reduced fees on several of its exchange-traded funds (ETFs) as part of its ongoing strategy to compete in the low-cost investment space. The fee reductions affected four specific ETFs, resulting in some fees being cut by as much as half, notably on its $4 billion 1000 Index ETF, which saw its fee drop from 5 basis points to 3. Similar reductions were made for other ETFs such as the International Equity ETF and the Emerging Markets Equity ETF, showcasing Schwab's commitment to maintaining competitive pricing. This move was not isolated, as Schwab had previously lowered fees on its International Dividend Equity ETF earlier in 2025 and also made multiple reductions in 2022. These strategic decisions are aimed at positioning Schwab as a leader in cost-effective investment options within the increasingly competitive ETF marketplace, where major players such as Vanguard and State Street are also pushing lower fees. Vanguard, for instance, made headlines earlier this year by reducing fees on 87 funds by an average of 20%, demonstrating the pressure on asset managers to lower costs for investors. Schwab's latest actions are part of a broader industry trend where firms are responding to the growing demand for cheaper investment products. Investors are increasingly prioritizing lower fees, and Schwab is actively appealing to those seeking cost-effective investment strategies. In addition to the fee cuts, Schwab announced share splits for several of its mutual funds. This includes significant splits for funds like the Schwab 1000 Index and Total Stock Market Index funds. These changes not only reflect Schwab’s focus on enhancing its product offerings but also signal an intent to attract more investors by making funds more accessible. Overall, Schwab's ongoing fee reductions and strategic adjustments in its mutual funds capitalize on a market that increasingly values lower costs and transparent pricing structures.