Schwab Launches First Global RE Mutual Fund to Track a Fundamentally Weighted Index

By Scott Baltic, Contributing Editor

John Sturiale, senior vice president, Investment Product Management at Charles Schwab

Charles Schwab Investment Management Inc., of San Francisco, will expand its index mutual fund lineup with the launch of the Schwab Fundamental Global Real Estate Index Fund (SFREX), Schwab announced yesterday. The new fund reportedly is the only U.S.-based real estate fund to apply the Russell Fundamental Index Series to a broad-based, global portfolio of real estate securities.

The new fund will track the Russell Fundamental Global Select Real Estate Index. The index comprises more than 200 real estate companies in 20 countries and measures the performance of residential and commercial real estate companies and REITs in U.S. and non-U.S. markets, including developed and emerging markets, using a fundamentally weighted methodology.

Products using fundamentally weighted strategies weight securities based not on market capitalization, but instead on economic factors such as adjusted sales, retained operating cash flow and dividends plus buybacks. (More detailed information on top holdings, performers and countries relative to the Russell Fundamental Global Select Real Estate Index can be found here.

“This new addition to Schwab’s index mutual fund family marries the diversification and dividend potential of global real estate with the intelligence of the Fundamental Index methodology, which we believe is a powerful combination,” said John Sturiale, senior vice president of product management at Charles Schwab & Co. Inc., said in a release.

Agnes Hong, managing director and head of passive equity strategies for Charles Schwab Investment Management, leads the portfolio management teams of Schwab’s ETFs and passive equity funds, which include the Schwab Fundamental Index Funds.

Ferian Juwono, managing director and senior portfolio manager for CSIM, is responsible for the day-to-day co-management of these funds.

“The Schwab Fundamental Global Real Estate Index Fund will help meet investor demand for passive yet liquid real estate exposure,” Ben Carlos Thypin, director of market analysis at Real Capital Analytics, commented to Commercial Property Executive. “Investors have had access to such opportunities for decades via the REIT market, and funds like this represent an evolution in the publicly traded real estate investment market.”

The Schwab Fundamental Global Real Estate Index Fund will have a net operating expense ratio of 0.49 percent and is available for a $100 minimum investment. The subscription period for the fund will begin on Sept. 8 and continues until Oct. 21. The fund will be available for general purchase beginning Oct. 22.