Schwab Index ETF Expense Ratios vs. Vanguard ETF Comparison (Updated 2016)

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Schwab also had some reactionary price cuts to some of their Schwab Index ETFs last week. Here are the updated expense ratios, alongside the expense ratios of the closest equivalent ETF from Vanguard. In cases where both Vanguard and iShares compete, Schwab is now 2 basis points cheaper than Vanguard. This is because iShares recently dropped to mostly 1 basis point cheaper than Vanguard, and Schwab wants to keep the title of “cheapest”.

But let’s be clear, Vanguard’s success and mere presence (the “Vanguard effect“) is why these low-cost ETFs exist in the first place. Numbers are taken from the respective official websites as of 10/8/16.

Category Fund Name Expense Ratio Vanguard Expense Ratio
US Equity Schwab US Broad Market ETF (SCHB) 0.03% 0.05% (VTI)
Schwab US Large-Cap ETF (SCHX) 0.03% 0.08% (VV)
Schwab US Mid Cap ETF (SCHM)* 0.06% 0.08% (VO)
Schwab US Small-Cap ETF (SCHA)* 0.06% 0.08% (VB)
Schwab US Large-Cap Growth ETF (SCHG) 0.06% 0.08% (VUG)
Schwab US Large-Cap Value ETF (SCHV) 0.06% 0.08% (VTV)
Schwab U.S. Dividend Equity ETF (SCHD) 0.07% 0.09% (VYM)
Schwab U.S. REIT ETF (SCHH) 0.07% 0.12% (VNQ)
International
Equity
Schwab International Equity ETF (SCHF)* 0.07% 0.09% (VEA)
Schwab International Small-Cap Equity ETF (SCHC) 0.16% 0.17% (VSS)
Schwab Emerging Markets Equity ETF (SCHE)* 0.13% 0.15% (VWO)
US Bonds Schwab U.S. Aggregate Bond ETF (SCHZ)* 0.04% 0.06% (BND)
Schwab U.S. TIPS ETF (SCHP) 0.07% 0.08% (VTIP)
Schwab Short-Term U.S. Treasury ETF (SCHO) 0.08% n/a
Schwab Intermediate-Term U.S. Treasury ETF (SCHR) 0.08% n/a

* indicates ETFs that had a price cut 10/7/16.

Where should self-directed investors buy these ETFs? You can trade all Schwab Index ETFs commission-free in a Schwab brokerage account. Here is the full of over 200 commission-free ETFs at Schwab OneSource.

You can also use a broker with free trades like the Robinhood app (review) and Merrill Edge which gives you 30 free trades per month with $50,000 in assets across your Bank of America and Merrill Edge accounts.

Bottom line. Schwab has shown a willingness to sacrifice profits in the short-term in order to keep the title of “cheapest index funds”. I think this is brave move with long-term vision, and hopefully they can keep it up. The competition between iShares/Fidelity, Vanguard, and Schwab continues to lead to better products at lower prices for consumers. My personal investments (and lots of unrealized capital gains) are with Vanguard, but new DIY investors can now open an account at any of these three and build their own diversified, low-cost portfolio with no trade commissions.

See also: iShares Core ETF Expense Ratios vs. Vanguard ETF Comparison

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Comments

  1. Looks like you may have omitted Vangurd’s Intermediate Treasury ETF (VGIT) at 0.10% (unless it is being omitted for including agency bonds).

    • That is the reason it is omitted – Vanguard Intermediate-Term Government Bond ETF (VGIT) is not exclusively US Treasuries. Schwab doesn’t consider it a direct competitor, so I did not include it either. Some people also really don’t like mortgage-backed securities due to either prepayment risk if rates drop or people keeping their mortgages forever if rates rise.

      Vanguard Intermediate-Term Treasury Fund Admiral Shares (VFIUX) does exist at 0.10% expense ratio, but there is no ETF share version at this time.

  2. Have you had a chance to compare at least yield if not return on the Schwab and Ishares ETFs verses Vanguard? If they are beating Vanguard on expenses and performance that makes for a compelling reassessment of things. And of course trading volume and liquidity are factors. I’ve found that some of these new “Smart Beta” funds which are all the rage (or not) are trading in the low thousands of shares per day sometimes.

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