Schwab Asset Management is splitting the shares of two-thirds of its 33 exchange-traded funds, aiming to boost sales with lower share prices.
The company this week announced an effort to make 20 of its exchange-traded funds more attractive to financial advisors and retail investors by reducing net asset value through stock splits.
The ETFs affected, ranging from a 4-for-1 split through the Schwab US Large Cap Growth ETF (SCHG) to a 2-on-1 split by the Schwab International Stocks ETF (SCHF)will not change the overall value of a shareholder’s investment.
Schwab ETF Split: list of funds
The list of ETFs subject to a stock split, scheduled for October 9, all have current share prices ranging from $40 to $103.
Ticker
Fund
NAV/share
Split relationship
SCHG
Schwab US large-cap growth ETF
103.90
4-for-1
SHHD
Schwab US Dividend Equity ETF
85.02
3-for-1
SCHM
Schwab American mid-cap ETF
83.20
3-for-1
SCHV
Schwab US Large-Cap Value ETF
80.26
3-for-1
FNDX
Schwab Fundamental US ETF for large companies
71.55
3-for-1
FNDB
Schwab Fundamental US Broad Market ETF
70.18
3-for-1
SCHX
Schwab US large-cap ETF
67.74
3-for-1
SCHB
Schwab US Broad Market ETF
66.39
3-for-1
FNDA
Schwab Fundamental US Small Company ETF
59.58
2-for-1
SCHK
Schwab 1000 Index® ETF
55.16
2-for-1
SCHP
Schwab US TIPS ETF
53.78
2-for-1
SCYB
Schwab High Yield Bond ETF
53.36
2-for-1
SCMB
Schwab Municipal Bond ETF
52.33
2-for-1
SCHA
Schwab US Small-Cap ETF
51.57
2-for-1
SCHR
Schwab Medium Maturity US Treasury Bond ETF
50.76
2-for-1
SCHJ
Schwab 1-5 Year Corporate Bond ETF
49.69
2-for-1
SCHO
Schwab Short-Term U.S. Treasury Bond ETF
49.06
2-for-1
SCHZ
Schwab US Total Bond ETF
47.66
2-for-1
SCHI
Schwab 5-10 Year Corporate Bond ETF
46.28
2-for-1
SCHF
Schwab International Stocks ETF
40.76
2-for-1
ETF stock split: what it means
“Splitting ETF shares is primarily about maintaining or increasing accessibility for investors,” says Nate Geraci, founder of The ETF Store in Overland Park, Kans.
“The lower price makes it easier for advisors to deploy and manage the ETFs in portfolios, especially for smaller dollar accounts,” he added. “It also appeals to private investors because it offers the perception of affordability.”
Ryan Jackson, senior manager research analyst at Morningstar, explained that the ETF share split “doesn’t matter much to current investors.”
“They do not impact the overall value of the ETFs and do not create a taxable event,” he said. “It might improve liquidity in some cases because more investors might be able to trade it, but that’s a benefit on a very small scale. It is mainly business as usual.”
Scwhab ETF splits could increase demand
Jackson added that stock splits are an easy way to potentially increase demand for Schwabs ETFs.
“Schwab in particular is a hit with the individual investing community, and its lower price could entice even more retail investors to jump on board,” he added.
Schwab Asset Management is the asset management arm of Charles Schwab Corp. in Westlake, Texas.
Schwab has 31 ETFs representing $375 billion in assets.
Sumit Roy, senior ETF analyst at etf.com, agreed that stock splits are “just cosmetic and don’t change anything for investors, especially in the age of fractional share trading.”
Tim Holsworth, president of AHP Financial in Midland, Michigan, thinks most investors and financial advisors have long since looked past the stock split to generate new investor interest.
“We know that the real value does not change due to splits,” he said. “As a seasoned veteran, it seems to me that stock splits used to be a way to increase interest in the stock and encourage buying, but I don’t think it matters like it used to.”
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