Schwab Intelligent Portfolios Selection Process
Exchange-traded funds (ETFs) are the basic building blocks of Schwab Intelligent Portfolios®, which includes 51 of the 2,000+ ETFs in the marketplace. ETFs are selected based on a set of criteria that includes their ability to provide exposure to broad asset classes, low operating expense ratios, efficient trading characteristics, and close tracking to their targeted index. Most asset classes within Schwab Intelligent Portfolios consists of a primary ETF and a secondary ETF, which is used mainly for tax-loss harvesting purposes.
Our portfolios are designed to be low cost, and range in weighted average annual ETF Operating Expense Ratios (OERs) from 0.05% to 0.18%. Since Schwab Intelligent Portfolios charges no advisory fees, trading commissions or account service fees, considering OERs are an important part of keeping costs low for investors.
The ETF fund list shown below is representative of Schwab Intelligent Portfolios as of April 30, 2020. Your actual portfolio may differ.
Stocks Primary ETF Secondary ETF U.S. Large Company SCHX – Schwab U.S. Large-Cap VOO–Vanguard S&P 500 U.S. Large Company–Fundamental FNDX–Schwab Fundamental U.S. Large Company PRF–Invesco FTSE RAFI US 1000 U.S. Small Company SCHA–Schwab U.S. Small-Cap VB–Vanguard Small-Cap U.S. Small Company–Fundamental FNDA–Schwab Fundamental U.S. Small Company PRFZ–Invesco FTSE RAFI U.S. 1500 Small-Mid International Developed Large Company SCHF–Schwab International Equity VEA–Vanguard FTSE Developed Markets International Developed Large Company-Fundamental FNDF–Schwab Fundamental International Large Company PXF–Invesco FTSE RAFI Developed Markets ex-U.S. International Developed–Small Company SCHC–Schwab International Small-Cap Equity VSS–Vanguard FTSE All-World ex-U.S. Small Cap International Developed Small Company–Fundamental FNDC–Schwab Fundamental International Small Company PDN–Invesco FTSE RAFI Developed Markets ex-U.S. Small-Mid International Emerging Markets SCHE–Schwab Emerging Markets Equity IEMG–iShares Core MSCI Emerging Markets International Emerging Markets–Fundamental FNDE–Schwab Fundamental Emerging Markets Large Company PXH–Invesco FTSE RAFI Emerging Markets U.S. Exchange-Traded REITS SCHH–Schwab U.S. REIT USRT- iShares Core U.S. REIT International Exchange-Traded REITS HAUZ – Xtrackers International Real Estate VNQI–Vanguard Global ex-U.S. Real Estate U.S. High Dividend SCHD–Schwab U.S. Dividend Equity VYM–Vanguard High Dividend Yield International High Dividend HDEF—Xtrackers MSCI EAFE High Dividend Yield Equity ETF VYMI—Vanguard International High Dividend Yield
- Fixed Income
Fixed Income Primary ETF Secondary ETF U.S. Treasuries SCHR–Schwab Intermediate-Term U.S. Treasury IEI—iShares 3-7 Year Treasury Bond U.S. Investment Grade Corporate Bonds VCIT–Vanguard Intermediate-Term Corporate Bond SPIB–SPDR® Portfolio Intermediate Term Corporate Bond U.S. Securitized Bonds VMBS–Vanguard Mortgage-Backed Securities MBB–iShares MBS U.S. Inflation Protected Bonds SCHP–Schwab U.S. TIPS SPIP—SPDR Portfolio TIPS U.S. Corporate High Yield Bonds HYLB–Xtrackers USD High Yield Corporate Bond USHY—iShares Broad USD High Yield Corp Bond International Developed Country Bonds BNDX–Vanguard Total International Bond IAGG—iShares Core International Aggregate Bond International Emerging Markets Bonds EBND–SPDR® Bloomberg Barclays Emerging Markets Local Bond EMLC– VanEck Vectors JP Morgan EM Local Currency Bond Preferred Securities PFFD—Global X U.S. Preferred PSK–SPDR Wells Fargo Preferred Stock Bank Loans BKLN–Invesco Senior Loan N/A Investment Grade Municipal Bonds VTEB–Vanguard Tax-Exempt Bond TFI– SPDR® Nuveen Bloomberg Barclays Muni Bond Investment Grade California Municipal Bonds CMF–iShares California Muni Bond PWZ–Invesco California AMT-Free Muni Bond
Commodities Primary ETF Secondary ETF Gold and Other Precious Metals IAU–iShares Gold Trust GLTR– Aberdeen Standard Physical Precious Metals Basket Shares
There is no advisory fee or commissions charged for Schwab Intelligent Portfolios. For Schwab Intelligent Portfolios Premium, there is an initial planning fee of $300 upon enrollment and a $30 per month advisory fee charged on a quarterly basis as detailed in the Schwab Intelligent Portfolios Solutions™ disclosure brochures. Investors in Schwab Intelligent Portfolios and Schwab Intelligent Portfolios Premium (collectively, "Schwab Intelligent Portfolios Solutions") do pay direct and indirect costs. These include ETF operating expenses which are the management and other fees the underlying ETFs charge all shareholders. The portfolios include a cash allocation to a deposit account at Schwab Bank FDIC-insured Deposit Accounts at Charles Schwab Bank ("Schwab Bank"). Schwab Bank Our affiliated bank earns income on the deposits, and earns more the larger the cash allocation. The lower the interest rate Schwab Bank pays on the cash, the lower the yield. Some cash alternatives outside of Schwab Intelligent Portfolios Solutions pay a higher yield. Deposits held at Schwab bank are protected by FDIC insurance up to allowable limits per depositor, per account ownership category. Schwab Intelligent Portfolios Solutions invests in Schwab ETFs. A Schwab affiliate, Charles Schwab Investment Management, receives management fees on those ETFs. Schwab Intelligent Portfolios Solutions also invests in third party ETFs. Schwab receives compensation from some of those ETFs for providing shareholder services, and also from market centers where ETF trade orders are routed for execution. Fees and expenses will lower performance, and investors should consider all program requirements and costs before investing. Expenses and their impact on performance, conflicts of interest, and compensation that Schwab and its affiliates receive are detailed in the Schwab Intelligent Portfolios Solutions disclosure brochures.
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