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Schwab Personalized Indexing®

Your clients can now have a professionally managed strategy that is tax optimized and can be customized as a core component of their portfolio.

What advisors should know about Schwab Personalized Indexing®

Watch this short video to understand how Schwab Personalized Indexing takes index investing to the next level.

JEFF BROWN:  Hi, I’m Jeff Brown, Investment Portfolio Strategist at Charles Schwab. In this short video, I’m going to talk about Schwab Personalized Indexing®, an advisor-led solution from Schwab Asset Management. It’s a separately managed account that offers customizable, index-based investing with tax-efficient management. It’s straightforward, cost-effective, easy to implement, and easy to scale. With an account minimum of just $100,000, Schwab Personalized Indexing makes direct indexing accessible to a wide range of investors. We offer access to several different index strategies, enabling clients to select the market coverage that best fits their overall portfolio. Let’s take a closer look at some of the key benefits of this offer. 

First, Schwab Personalized Indexing is tax-efficient. Using a process called tax loss harvesting, it monitors each client’s account daily to look for opportunities to lock in tax losses to offset gains, thereby helping to potentially increase a client’s after-tax return. 

Second, it’s customizable. The advisor and client select one or more of the offered indices, and they can personalize the accounts by excluding individual securities, sub-industries, and industries. This customization and personalization can help investors identify with the investment strategy and possibly stay committed to the strategy for longer timeframes, all while taking into account stocks or groups of stocks the client does not want to hold or add to, like their company stock. 

And third, it’s professionally managed. Our Portfolio Management team leverages advanced technology to optimize each client’s portfolio, and monitor it daily, freeing up the advisor’s time to tend to other aspects of the client’s portfolio and their experience. 

If you think Schwab Personalized Indexing might be a good fit for your clients, please reach out to your Schwab representative. We look forward to hearing from you.

Disclosures

For institutional use only - not for further distribution.

This information is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. 

Please refer to the Charles Schwab Investment Management, Inc. Disclosure Brochure for additional information. 

Portfolio Management for Schwab Personalized Indexing is provided by Charles Schwab Investment Management, Inc., dba Schwab Asset Management®, a registered investment adviser and an affiliate of Charles Schwab & Co., Inc. (“Schwab”). Both Schwab Asset Management and Schwab are separate entities and subsidiaries of The Charles Schwab Corporation. 

Diversification and asset allocation strategies do not ensure a profit and cannot protect against losses in a declining market. 

Indexes are unmanaged, do not incur management fees, costs and expenses, and cannot be invested in directly. 

There are risks associated with any investment approach, and each Schwab Personalized Indexing strategy and equity market segment has their own set of risks based on client strategy selection and further customization. 

Neither the tax-loss-harvesting strategy nor any discussion herein is intended as tax advice, and Schwab Asset Management does not represent that any particular tax consequences will be obtained. Tax-loss harvesting involves certain risks including unintended tax implications. Investors should consult with their tax advisors and refer to the Internal Revenue Service (“IRS”) website at www.irs.gov for the consequences of tax-loss harvesting. 

Strategies that use screening to exclude certain investments may not be able to take advantage of the same opportunities or market trends as strategies that do not use screens. There can be no assurance that the strategies will achieve their desired outcomes. There can be no assurance that the strategies will achieve their desired outcomes. Each investing strategy brings with it its own set of unique risks and benefits. 

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An index-based portfolio your clients can personalize

Schwab Personalized Indexing is designed to be a core component of your client’s investments. It gives them an equity portfolio that can be shaped to be consistent with their goals and personal values.

Customizable

  • Choose from six index-based strategies for the market exposure your client prefers, with the ability to exclude individual stock and/or industry categories.1

Professionally managed

  • Portfolio managers leverage advanced technology to optimize your client’s portfolio and monitor it on a daily basis.

Tax efficient

Schwab Personalized Indexing can serve as a tax-efficient foundation for your client’s portfolio. With the ability to automatically manage gains and losses at the individual holding level, each direct indexing strategy provides tax-loss harvesting and potentially greater annual after-tax returns (or tax alpha Tooltip ).

spiral staircase

1 The extent to which holdings can be personalized is subject to account type and investment management guidance. All accounts may exclude up to three securities

What we offer

We offer a variety of strategies to choose from:

Schwab 1000 Equity

Designed to capture representation of the 1,000 largest U.S. companies, covering approximately 90% of total U.S. stock market capitalization.

US 500 Large Cap

Designed to capture representations of the large-cap segment of the U.S. equity market, targeting the 500 largest U.S. companies.
 

US 3000 Broad Market

Designed to capture representations of the largest 3,000 U.S. companies, covering approximately 98% of the total U.S. stock market capitalization.

S&P Small Cap 600®

Designed to capture representation of the small cap segment of the U.S. equity market.

MSCI KLD 400 Social

Designed to capture exposure to companies with outstanding ESG ratings and excludes companies whose products have negative social or environmental impacts.

MSCI EAFE International

Designed to capture large- and mid-cap representation of developed markets* around the world, excluding the U.S. and Canada. It is composed of equities across countries in Europe, Australasia, and the Far East.

* While this strategy looks to approximate the pre-tax return and risk characteristics of the MSCI EAFE Index, it will not invest directly in the local securities tracked by the index and will instead invest in American Depositary Receipts (ADRs) that are traded on U.S. Exchanges which may not align to the index exposure of every country at all times.

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This information provided here is for general informational purposes only, is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, you should consult with a qualified tax advisor, CPA, Financial Planner, or Investment Manager.

Please refer to the Charles Schwab Investment Management, Inc. Disclosure Brochure for additional information.

Schwab Personalized Indexing is available through Schwab's Managed Account Connection® program ("Connection"). Please read Schwab's disclosure brochure for important information and disclosures relating to Connection and Schwab Managed Account Services.

Portfolio Management for Schwab Personalized Indexing® is provided by Charles Schwab Investment Schwab Asset Management®, Inc., dba Schwab Asset Management, a registered investment adviser and an affiliate of Charles Schwab & Co., Inc. (“Schwab”). Both Schwab Asset Management and Schwab are separate entities and subsidiaries of The Charles Schwab Corporation.

Diversification strategies do not ensure a profit and do not protect against losses in declining markets.

Indexes are unmanaged, do not incur management fees, costs and expenses, and cannot be invested in directly.

There are risks associated with any investment approach, and each Schwab Personalized Indexing strategy and equity market segment has their own set of risks based on client strategy selection and further customization. Please refer to the Charles Schwab Investment Management, Inc. Disclosure Brochure and Schwab's disclosure brochure for additional risk disclosure information.

Neither the tax-loss-harvesting strategy nor any discussion herein is intended as tax advice, and Schwab Asset Management does not represent that any particular tax consequences will be obtained. Tax-loss harvesting involves certain risks including unintended tax implications. Investors should consult with their tax advisors and refer to the Internal Revenue Service (“IRS”) website at www.irs.gov for the consequences of tax-loss harvesting.

International investments involve additional risks, which include differences in financial accounting standards, currency fluctuations, geopolitical risk, foreign taxes and regulations, and the potential for illiquid markets. Investing in emerging markets may accentuate these risks.

Large-cap companies are generally more mature and the securities issued by these companies may not be able to reach the same levels of growth as the securities issued by small- or mid-cap companies.

Mid-cap companies may be more vulnerable to adverse business or economic events than larger, more established companies and the value of securities issued by these companies may move sharply.

​Small-Cap Company Risk. Small-cap companies may be more vulnerable to adverse business or economic events than larger, more established companies and their securities may be riskier than those issued by larger companies. The value of securities issued by small-cap companies may be based in substantial part on future expectations rather than current achievements and their prices may move sharply, especially during market upturns and downturns. In addition, small-cap companies may have limited financial resources, management experience, product lines and markets, and their securities may trade less frequently and in more limited volumes than the securities of larger companies. Further, small-cap companies may have less publicly available information and such information may be inaccurate or incomplete.

Securities issued by small-cap companies may be riskier than those issued by larger companies, and their prices may move sharply, especially during market upturns and downturns.

Environmental, social and governance (ESG) strategies implemented by mutual funds, exchange-traded funds (ETFs), and separately managed accounts are currently subject to inconsistent industry definitions and standards for the measurement and evaluation of ESG factors; therefore, such factors may differ significantly across strategies. As a result, it may be difficult to compare ESG investment products. An investment product’s ESG strategy may significantly influence its performance Carefully review an investment product’s prospectus or disclosure brochure to learn more about how it incorporates ESG factors into its investment strategy.

Strategies that use screening to exclude certain investments may not be able to take advantage of the same opportunities or market trends as strategies that do not use screens. There can be no assurance that the strategies will achieve their desired outcomes. There can be no assurance that the strategies will achieve their desired outcomes. Each investing strategy brings with it its own set of unique risks and benefits.

SPI Schwab 1000 Equity. The strategy seeks to track the performance of and mimic the characteristics of the Schwab 1000 Index while enhancing after-tax returns through the use of tax-efficient optimization methodologies. The strategy invests primarily in equity securities. The Schwab 1000 Index is a float-adjusted market capitalization weighted index that includes the 1,000 largest stocks of publicly traded companies in the U.S., with size being determined by market capitalization (total market value of all shares outstanding). Schwab Asset Management will actively trade holdings for accounts in this strategy in an attempt to enhance after-tax returns through tax-efficient optimization methodologies. While this strategy looks to approximate the pre-tax return and risk characteristics of the Schwab 1000 Index, it will not always be aligned to the index. The securities selected for a client’s account can be individually tailored based on a client’s investment restrictions and account size, as well as tax attributes of the assets held in the account.

There are inherent risks to investing in the SPI Schwab 1000 Equity strategy. As the strategy develops and changes over time, clients and investors may be subject to additional and different risk factors. No assurance can be made that profits will be achieved or that substantial losses will not be incurred. Some of these risks may include, but are not limited to, optimization tools risks, tax risks, index-related activities, market volatility, frequent trading and large-cap company securities. Each individual investor should consider these risks carefully before investing in a particular security or strategy. More information regarding these specific risks can be found in Charles Schwab Investment Management, Inc. Disclosure Brochure. The list of top holdings should not be considered a recommendation to purchase or sell any particular security. The securities listed do not represent an entire portfolio as of the date indicated or as of any other date and may represent in the aggregate only a small percentage of portfolio holdings. Holdings and allocations are subject to change without notice.

SPI S&P Small Cap 600. The strategy seeks to track the performance of and mimic characteristics of the S&P SmallCap 600® Index while enhancing after-tax returns through the use of tax-efficient optimization methodologies. The strategy invests primarily in equity securities. The S&P SmallCap 600 Index is a float adjusted market capitalization weighted index that seeks to measure the small-cap segment of the US equity market. The index is designed to track companies that meet specific inclusion criteria to ensure they are liquid and financially viable. CSIM will actively trade holdings for accounts in this strategy in an attempt to enhance after-tax returns through tax efficient optimization methodologies. While this strategy looks to approximate the pre-tax return and risk characteristics of the S&P SmallCap 600 Index, it will not always be aligned to the index.

SPI MSCI KLD 400 Social. The strategy seeks to track the performance of and mimic characteristics of the MSCI KLD 400 Social Index while enhancing after-tax returns through the use of tax-efficient optimization methodologies. The strategy invests primarily in equity securities. The MSCI KLD 400 Social Index is a capitalization weighted index of 400 U.S. securities that provides exposure to companies with outstanding Environmental, Social and Governance (“ESG”) ratings and excludes companies whose products have negative social or environmental impacts. CSIM will actively trade holdings for accounts in this strategy in an attempt to enhance after-tax returns through tax efficient optimization methodologies. While this strategy looks to approximate the pre-tax return and risk characteristics of the MSCI KLD 400 Social Index, it will not always be aligned to the index

SPI MSCI EAFE International. The strategy seeks to track the performance of and mimic characteristics of the MSCI EAFE Index while enhancing after-tax returns through the use of tax-efficient optimization methodologies. The strategy invests primarily in American Depositary Receipts (“ADRs”) and equity securities of MSCI EAFE Index issuers that are traded on U.S. stock exchanges. The MSCI EAFE Index is a free float-adjusted, market capitalization-weighted index designed to measure large- and mid-capitalization equity market performance of developed markets, including countries in Europe, Australasia and the Far East, excluding the U.S. and Canada. CSIM will actively trade holdings for accounts in this strategy in an attempt to enhance after-tax returns through tax-efficient optimization methodologies. While this strategy looks to approximate the pre-tax return and risk characteristics of the MSCI EAFE Index, it will not always be aligned to the index.

The Schwab 1000 Index® is the property of Charles Schwab Investment Management, Inc. (CSIM) which has contracted with S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC) to calculate and maintain the Index. The Index is not sponsored by S&P Dow Jones Indices or its affiliates or its third party licensors (collectively, "S&P Dow Jones Indices"). S&P Dow Jones Indices will not be liable for any errors or omissions in calculating the Index. "Calculated by S&P Dow Jones Indices" and the related stylized mark(s) are service marks of S&P Dow Jones Indices and have been licensed for use by CSIM. S&P® is a registered trademark of Standard & Poor's Financial Services LLC ("SPFS''), and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones").

“MSCI EAFE Index” is a registered mark of MSCI and has been licensed for use by the SPI MSCI EAFE International strategy. The funds or securities referred to herein are not sponsored, endorsed, or promoted by MSCI and MSCI bears no liability with respect to any such funds or securities or any index on which such funds or securities are based.

“MSCI KLD 400 Social Index” is a registered mark of MSCI and has been licensed for use by the SPI MSCI KLD 400 Social strategy. The funds or securities referred to herein are not sponsored, endorsed, or promoted by MSCI and MSCI bears no liability with respect to any such funds or securities or any index on which such funds or securities are based.

The S&P SmallCap 600® Index (“Index”) is a product of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”) and has been licensed for use by Charles Schwab Investment Management, Inc. S&P®, S&P 500®, US 500, The 500, iBoxx®, iTraxx® and CDX® are trademarks of S&P Global, Inc. or its affiliates (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”) and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Charles Schwab Investment Management, Inc (“Licensee”). It is not possible to invest directly in an index. The Schwab Personalized Indexing (SPI) S&P Small Cap 600 strategy is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, any of their respective affiliates (collectively, “S&P Dow Jones Indices”). S&P Dow Jones Indices does not make any representation or warranty, express or implied, to the owners of the Schwab Personalized Indexing (SPI) S&P Small Cap 600 strategy or any member of the public regarding the advisability of investing in securities generally or in the Schwab Personalized Indexing (SPI) S&P Small Cap 600 strategy particularly or the ability of the Index to track general market performance. Past performance of an index is not an indication or guarantee of future results. S&P Dow Jones Indices’ only relationship to Licensee with respect to the Index is the licensing of the Index and certain trademarks, service marks and/or trade names of S&P Dow Jones Indices and/or its licensors. The Index is determined, composed and calculated by S&P Dow Jones Indices without regard to Licensee or the Schwab Personalized Indexing (SPI) S&P Small Cap 600 strategy. S&P Dow Jones Indices has no obligation to take the needs of Licensee or the owners of the Schwab Personalized Indexing (SPI) S&P Small Cap 600 strategy into consideration in determining, composing or calculating the Index. S&P Dow Jones Indices has no obligation or liability in connection with the administration, marketing or trading of the Schwab Personalized Indexing (SPI) S&P Small Cap 600 strategy. There is no assurance that investment products based on the Index will accurately track index performance or provide positive investment returns.  S&P Dow Jones Indices LLC is not an investment adviser, commodity trading advisory, commodity pool operator, broker dealer, fiduciary, promoter” (as defined in the Investment Company Act of 1940, as amended), “expert” as enumerated within 15 U.S.C. § 77k(a) or tax advisor.  Inclusion of a security, commodity, crypto currency or other asset within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, commodity, crypto currency or other asset, nor is it considered to be investment advice or commodity trading advice.

The Charles Schwab Corporation provides a full range of brokerage, banking and financial advisory services through its operating subsidiaries. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (Member SIPC), offers investment services and products, including Schwab brokerage accounts. Its banking subsidiary, Charles Schwab Bank, SSB (member FDIC and an Equal Housing Lender), provides deposit and lending services and products.

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Investment and Insurance Products Are: Not FDIC Insured • Not Insured by Any Federal Government Agency • Not a Deposit or Other Obligation of, or Guaranteed by, the Bank or Any of Its Affiliates • Subject to Investment Risks, Including Possible Loss of Principal Amount Invested

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