Schwab Eyes 20% Growth After $1.2T Milestone

Smaller, independent fund issuers often need to see their products reach specific size thresholds before they are accepted onto trading platforms and wirehouses.

Schwab Asset Management’s position within a larger investment company gives it a somewhat “built-in” distribution network, where they can tap in to the millions of investors that use the parent company’s brokerage platform.

Schwab is the fifth-largest issuer of exchange-traded funds in the U.S., with its nearly $350 billion suite having more than doubled since 2019, according to Bloomberg Intelligence.

Aguilar is also looking to grow Schwab Asset Management’s model portfolio business over the next several years. He estimated that roughly $50 billion to $75 billion is invested in their models currently.

While Aguilar sees the firm’s ETF business growing, he doesn’t necessarily think the mutual fund wrapper will soon be obsolete. In retirement accounts — like 401(k)s — the technology supports mutual funds better than ETFs, he said.

“I still question whether or not the clients will end up benefiting from having an ETF within their retirement account,” he said. “On the other side, for the taxable accounts, there is going to be less need for a mutual fund and definitely the trend will favor ETFs.”

(Credit: Charles Schwab)