By Andrew Welsch

Charles Schwab cut the fee for its Schwab International Dividend Equity ETF (SCHY), the latest sign of ongoing fee wars among asset managers striving to attract investor dollars.

SCHY's operating expense ratio fell to 8 basis points from 14 basis points (a basis point is one one-hundredth of a percentage point).

The exchange-traded fund invests in non-U.S. high-dividend paying stocks that have a record of paying dividends for at least 10 consecutive years. SCHY's 30-day yield is 4.24% as of Feb. 26. Its top holdings include Swiss biotechnology company Roche Holding, French construction company Vinci S.A., and London-based consumer products maker Unilever.

SCHY was launched in 2021 and has a total net assets of $822 million as of Feb. 27. It is up 5.5% so far in 2025, according to Morningstar.

"This change is emblematic of Schwab Asset Management's commitment to investors to lower costs and deliver savings to them," says Nicohl Bogan, director of product strategy and development at Schwab Asset Management.

Schwab's fee cut comes as more asset managers have been steadily reducing fees to appeal to cost-conscious investors.

Vanguard's move. In early February, giant asset manager Vanguard axed fund fees for dozens of mutual and exchange-traded funds. Although such fee reductions may only be a few basis points, the cost-savings can add up for long-term investors. A 2023 Morningstar study found that the asset-weighted average fee had fallen to 0.36% from 0.87% in 2004.

Asset managers have also been launching more ETFs, both active and passive. In February, Schwab launched its second actively managed fixed income ETF, Schwab Core Bond ETF (SCCR). The fund seeks to generate income by buying corporate bonds, taxable municipal bonds, U.S. Treasuries, and other government-related bonds. Vanguard has been launching actively-managed ETFs, with a focus on fixed income.

Investors have been favoring ETFs over mutual funds because of their transparency and tax-efficient structure.

Write to Andrew Welsch at andrew.welsch@barrons.com

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February 28, 2025 12:34 ET (17:34 GMT)

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