Investors can now invest directly in the US market with Charles Schwab
SINGAPORE (Nov 5): When it comes to investing, many Singapore investors have a home bias. This is because they prefer to invest based on the familiarity of their own domestic market, rather than the unfamiliarity of international markets. Such a preference, unfortunately, means that investors may be missing out on investment opportunities. While investing in foreign markets is not without risks, diversification is key for any portfolio to help mitigate risk.
Charles Schwab — a leading US bank and brokerage — reckons that the US market provides a great avenue for Singaporean investors to diversify and at the same time take advantage of the benefits of investing in the country. This is because the US market is well-established, offers investors more choice, has greater liquidity and is better capitalised than any other market in the world. The abundance of financial information and strictly observed reporting regulations make this US market highly transparent. The scale and competitiveness of the US markets combined with the Schwab value of seeing investing through clients’ eyes means Singaporean investors could benefit from lower costs and better outcomes through diversification of their portfolio.
Charles Schwab offers mass affluent and high-net-worth Singapore investors the opportunity to invest directly in a variety of US investment products, on the same low-cost structure as a US investor. These include equities, exchange-traded funds (ETFs), options, futures, offshore mutual funds and fixed-
income products, all of which are denominated in US dollars. The firm also provides specialised services such as proprietary Schwab Equity Ratings, sophisticated stock screeners, third-party research and trading software for active investors. In addition, Charles Schwab organises webinars and workshops to help investors learn more about trading and investing in the US market.
Liz Ann Sonders, chief investment strategist at Charles Schwab, says: “Singapore investors are sophisticated and have a certain exposure to the international market. However, [their] current exposure to international markets is often limited to foreign exchange, and there may be an opportunity to maximise their investment return by exploring other vehicles.
“We believe that the US market can provide a critical opportunity for portfolio diversification, as it is the largest and most liquid market in the world.”
Global expansion
Charles Schwab can trace its origins to the publishing of an investment advisory newsletter called Investment Indicator, launched by Chuck Schwab and two other partners in 1963. At its height, the newsletter had 3,000 subscribers, each paying US$84 a year for their subscription. In 1971, Chuck diversified into the securities broker-dealer business and, in 1973, changed his firm’s name to Charles Schwab & Co.
Today, Charles Schwab is a Fortune 500 company known for its innovativeness and focus on putting the client first. The firm made investing more accessible and easier by becoming the industry’s first discount brokerage firm. It has more than 11.4 million active brokerage accounts and 1.3 million banking accounts, and had US$3.56 trillion ($4.93 trillion) in assets under management as at Oct 15, 2018. Apart from its clients in the US, it also serves investors in Hong Kong, Australia and the UK via its affiliates.
Last year, Charles Schwab opened its Singapore affiliate at One George Street after its successful merger with optionsXpress. This new business launch is in line with the firm’s commitment to help “champion” investors by providing greater access to the US market. “The Singapore office launch aims to empower Singapore and the broader Asian investors by improving their access to the US markets through our proprietary tools and research, quality service and competitive pricing,” says Greg Baker, managing director of Charles Schwab Singapore. “We also see strong growth potential for Charles Schwab in Singapore and the broader Southeast Asian region.”
While its presence here may be considered a little belated compared with those of its peers, Charles Schwab believes the timing is right because it completed a system integration and accounts migration from optionsXpress in October last year. “We have taken our time to ensure full integration of systems and consistent service level as we promised for all Charles Schwab clients,” says Baker. “This is a moment of great strength in the overall Schwab franchise, which enables us to seek opportunities to expand our proven model of serving US market investors in new growth-oriented markets.”
Investor centric
Charles Schwab’s unique value proposition to Singapore investors is this: no trade-offs between low prices and personal customer service. Baker says the firm is always finding ways to serve its clients based on its core belief of seeing through clients’ eyes. “Whatever we do, we will strive to make investing easier, more accessible and more intelligent. We strive to help investors achieve their financial goals,” he says.
For instance, Charles Schwab offers a “competitive” fee and commission structure. The firm recently reduced the price of online equity and ETF trade commissions to a flat fee of just US$4.95. Its ETF offerings are among the lowest-priced in the industry: It offers more than 200 ETFs commission-free and its offshore mutual funds are accessible with no upfront sales load. “That is one of the values of investing with Schwab because we understand that high trading [and] execution costs negatively impact investors’ return,” says Baker.
Charles Schwab also allows investors to make queries to the firm’s financial consultants anytime, six days a week. “We encourage our clients to ask questions because information can yield powerful results, improve decision-making and generate better outcomes,” says Baker. “We help clients to identify and set goals; and get invested and stay on track — guiding them through the process using our investing principles.”
Clients can find assurance of protection for their assets at Charles Schwab. Stocks and bonds that are fully paid for or excess margin securities are segregated from broker-dealer securities in compliance with the US Securities and Exchange Commission Customer Protection Rule. This is a legal requirement for all US broker-dealers. An additional layer of protection is offered by the US Securities Investor Protection Corp (SIPC), Lloyd’s of London and other London insurers (subject to specified limits).
If investors are unhappy with the services of Charles Schwab, the firm has a satisfaction guarantee policy — an industry first. This policy entails that any client who is not satisfied — for any reason — will be refunded for eligible commissions, transaction fees or advisory programme fees paid to the firm.
Important disclosure
Investment involves risk. Past performance is no indication of future results, and values fluctuate. International investments are subject to additional risks such as currency fluctuations, political instability and the potential for illiquid markets. Investing in emerging markets can accentuate these risks. Not all products, services, or investments are available in all countries. Nothing here is an offer or solicitation or advice to buy or sell of these securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration.
The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.
All expressions of opinion are subject to change without notice in reaction to shifting market, economic or political conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.
Diversification and rebalancing a portfolio cannot assure a profit or protect against a loss in any given market environment. Rebalancing may cause investors to incur transaction costs and, when rebalancing a non-retirement account, taxable events may be created that may affect your tax liability.
Charles Schwab Singapore Pte. Ltd. (holding a capital markets services license issued by the Monetary Authority of Singapore and an Exempt Financial Adviser as defined in the Financial Advisers Act) and Charles Schwab & Co., Inc. (Member SIPC) are separate but affiliated companies and subsidiaries of The Charles Schwab Corporation.
Charles Schwab Singapore Pte. Ltd., 1 George Street #07-01A, Singapore 049145 (Singapore Company Registration No. 200504402C) (1018-8PBU).
