New Schwab Ultra-Short Income ETF
A press release titled, "Schwab to Launch the Schwab Ultra-Short Income ETF" tells us, "Schwab Asset Management, the asset management arm of The Charles Schwab Corporation, ... announced the launch of the Schwab Ultra-Short Income ETF (SCUS), its first actively managed fixed income ETF. The first day of trading is expected to be on or about August 13. With an expense ratio of 0.14%, the Schwab Ultra-Short Income ETF is priced below the industry average of 0.25%. The ETF will provide access to the U.S. dollar denominated investment grade, short- term bond market and is designed to serve as part of a diversified portfolio." David Lafferty, Director of Product Strategy & Development at Schwab Asset Management, comments, "The Schwab Ultra-Short Income ETF is a notable addition to the Schwab family of ETFs as investors continue to seek out cost-effective, income-producing strategies to help diversify their portfolios. With SCUS, the first actively managed offering in our fixed income ETF lineup, we believe investors will benefit from our extensive credit research and portfolio management teams, along with the inherent features of an ETF." The release continues, "The goal of the Schwab Ultra-Short Income ETF is to seek current income consistent with capital preservation while maintaining liquidity. The ETF invests in investment grade, short-term, U.S. dollar denominated debt securities issued by U.S. and foreign issuers and will maintain a portfolio duration of one year or less." The website RIA Biz wrote about the announcement in its piece, "With key tweaks, Charles Schwab is introducing its first ultra-short bond product in 13 years; last time it paid dearly to settle an SEC complaint over similar product, YieldPlus." They say, "Charles Schwab Corp. is back in the ultrashort bond game 13 years after a scuffle with the SEC that no doubt left a bitter taste about the whole category – and how it's policed.... Schwab's last foray into a similar product was called 'YieldPlus,' which ended when Charles Schwab Investment Management and Charles Schwab & Co, agreed to pay more than $118 million to settle a Securities and Exchange Commission (SEC) investigation." They add, "When the 2008 financial crisis hit, Schwab's YieldPlus recorded a 35% dip after hitting peak assets of $13.5 billion. 'Back then it was a 'yield plus' bond mutual fund marketed as short-term cash-like, which went upside down as the fund manager chased yield, Lehman Bros-style, by buying all of those toxic mortgage-backed [securities] that were decimated during the financial crisis,' says Timothy Welsh, president of Nexus Strategy."
