Charles Schwab Embraces Active ETFs with New Bond Fund Launch
- Charles Schwab is launching the Schwab Core Bond ETF as its third active ETF.
- The new fund will be available from January 13, 2025, at a time of rising interest in fixed income investments.
- This initiative aligns with a broader industry trend towards active ETFs amid shrinking fees and significant mutual fund outflows.
Charles Schwab is set to debut a new actively-managed fixed income exchange-traded fund named the Schwab Core Bond ETF on January 13, 2025. This will become the firm's third active ETF, following the Schwab Ariel ESG ETF and Schwab Ultra-Short Income, which were launched in November 2021 and August 2024, respectively. The announcement comes during a time when the asset management sector is increasingly focusing on active strategies packaged as ETFs due to rising investor interest in these products. As fixed income investment gains appeal after years of low-interest rates, Schwab's Industry positioning could be well-timed. Active ETFs have witnessed substantial inflows, in contrast to active mutual funds that suffered significant outflows. Reports from Cerulli Associates indicate that active mutual funds lost over $300 billion, while active ETFs attracted more than $190 billion this year. The growing trend towards active ETFs reflects the evolving landscape within the asset management industry, where falling fee structures are influencing profitability. Major players like BlackRock, Pimco, and Vanguard have also been launching active fixed-income ETFs, signaling a competitive environment. As Schwab increases its ETF offerings and adapts to market demands, this move may offer investors new opportunities for diversification in their portfolios, while also contributing to Schwab's overall assets under management, which exceeds $1 trillion.