Charles Schwab Corp. recorded a remarkable surge in its fourth-quarter ETF assets as the total skyrocketed by $494.5 billion, or 27% year-over-year, as investors heavily invested in equity-oriented funds amid skyrocketing stock market activity, ranking the company among the top five issuers of exchange-traded funds (ETFs) in the United States.
The company is headquartered in Westlake, Texas. It disclosed that its ETF assets ballooned to $2.34 trillion during Q4, up from $1.84 trillion in the same period in 2023. The rise reflects a quarter-on-quarter uptick of $61.5 billion, or 2.7%, from the third-quarter figure of $2.27 trillion.
U.S. investors collectively poured a record $1.12 trillion into ETFs in 2024, riding the buoyancy of equity markets, which were driven by growing interest in artificial intelligence, technological innovation, cryptocurrency, and broader financial assets. Schwab’s extraordinary growth mirrored trends seen at BlackRock Inc., the global leader in ETF issuance, which recently reported $390 billion in fourth-quarter ETF inflows.
According to Aniket Ullal, head of CFRA ETF Research & Analytics and a contributing member of etf.com’s editorial review board, funds—including both ETFs and mutual funds—accounted for 56% of Schwab’s 2024 revenues sourced from asset management and administrative fees, or some 16% of its annual revenues overall. “This tremendous growth in ETF assets has profound implications for the long-term trajectory of the company,” Ullal said.
SCHD and SCHX Take the Lead with Strong Inflows
Schwab’s remarkable growth in ETF assets was mainly driven by healthy inflows into its flagship funds. The firm’s flagship $65.7 billion fund, the Schwab U.S. Dividend Equity ETF (SCHD), took in $6.02 billion during the quarter. This marked a threefold increase compared to the third quarter and an astonishing sixfold increase from Q4 2023. SCHD specifically targets companies with an established track record of at least a decade of consistent dividend payouts.
Analogously, the Schwab U.S. Large-Cap ETF (SCHX), with an investment value of $52.3 billion, attracted $3.94 billion in new assets over the same timeframe. It registered more than a threefold increase from its third-quarter performance and also more than a fivefold improvement from its Q4 2023 inflows. SCHX tracks a market-cap-weighted index of the 750 largest publicly traded companies in the United States.
Conversely, State Street Corp., the third-largest ETF issuer in the U.S., reported a lackluster performance in Q4 2024. Its SPDR ETF division received significantly fewer inflows than it did last year, and allocations to its flagship SPDR S&P 500 ETF Trust (SPY) decreased by more than 50%.
This tremendous growth in ETF assets by Schwab indicates the company’s strategic position in an increasingly competitive market and reaffirms its place as a dominant player in this changing financial landscape.
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FAQs
What is driving the growth of Schwab’s ETFs?
The growth is fueled by surging equity markets, increased demand for technology and AI investments, and the popularity of funds like SCHD and SCHX.
How do Schwab’s ETFs compare with its competitors’?
Schwab has shown significant growth compared to competitors like State Street Corp., although BlackRock remains the market leader.
What role does SCHD play in Schwab’s success?
SCHD focuses on dividend-paying companies and has attracted substantial inflows, making it a cornerstone of Schwab’s ETF growth.
Why are ETFs gaining popularity among investors?
ETFs offer cost-effectiveness, liquidity, and targeted market exposure, making them a preferred choice for diverse investment strategies.
What is Schwab’s outlook for future growth?
With strong momentum and strategic positioning, Schwab is expected to maintain its growth trajectory and expand its market presence.