ETF Investor Snapshot: Q1 2012

Information and insights contained in this Snapshot are based upon analysis of Exchange-Traded Funds (ETFs), regardless of ETF or distributor, custodied at Charles Schwab & Co., Inc., and include both Schwab Retail Clients and RIA Clients. Please see reverse for explanation of terms and conditions of use.
ETF Assets at Schwab: $138B (14% 12-Month Growth)
$121B 12% 19% 37% 39% 47% 58% Growth 2% $138B 11% 6%

12-Month ETF Flows at Schwab (% Segment Share)

0%

13% 51% 50%

Retail Traders Retail Investors RIA Clients

47%

42%

Mar 11

Mar 12

Apr 10 Mar 11

Apr 11 Mar 12

ETF TRENDS AT SCHWAB

ETF assets custodied at Schwab stood at $138 billion as of March 31, 2012, up 14% from the same period in 2011 and slightly above 13% ETF industry growth. 12-month ETF flows were driven primarily by Retail Investors, who represented 58% of flows for the period. RIA Clients had strong flows in Q1 2012, increasing their share of 12-month flows to 42%, up from 40% last quarter.

Q1 SPOTLIGHT: Retail Traders

Retail Trader ETF flows shifted in 2012: Retail Trader ETF flows turned positive in Q1 as this segment reversed flows in most asset categories alongside a strong market rally. About 35% of flows went into Sector ETFs, which represent just 13% of ETF assets. Retail Traders sought exposure to Real Estate, Financials and Technology. Commodity ETFs were back in favor, representing 19% of ETF flows, with two-thirds of these flows going into Gold. Retail Traders looked for income with High Yield ETFs in Q1, while other U.S. Fixed Income ETFs experienced net outflows. Retail Trader behavior differed significantly from other segments in a few key categories: While approximately 45% of flows went into U.S. Equity ETFs across all segments, Retail Traders accessed this asset class primarily with Sector ETFs, which represented three-quarters of these flows, versus just over one-third of flows for other segments. Retail Trader share of flows into Commodity ETFs was twice that of Retail Investors and four times that of RIA Clients. Retail Investors and RIA Clients had net positive U.S. Fixed Income flows, which could reflect buy and hold strategies.

Retail Trader Quarterly ETF Flows

Q1 12
6% 11% 14% 14% High Yield Other U.S. Equity Dividend Leveraged/Inverse International Equity

Q3 11 Q2 11 Q4 11

15%

19%

Commodity

35%

Sector

(3%) (11%)

Other Other U.S. FI

ETF Investor Snapshot: Q1 2012

FOR QUESTIONS, CONTACT Alyson Nikulicz Public Relations Charles Schwab & Co., Inc. Direct: (212) 403-9240 Email: alyson.nikulicz@schwab.com NOTES All data is as of March 31, 2012. Industry data from Strategic Insight; all other data from Charles Schwab & Co.

DEFINITIONS Schwab means Charles Schwab & Co., Inc., an SEC-registered broker-dealer and investment advisor. Schwab Retail Clients hold brokerage accounts at Schwab and work with Schwab directly either trading on their own or with some help and guidance from Schwab. This includes brokerage assets from retirement accounts (like 401(k)) that come with the ability to open and trade retirement account balances through a Schwab brokerage account. RIA stands for Registered Investment Advisor. RIA Clients: Schwab Advisor Services, supports Independent RIAs whose clients open accounts at Schwab and use Schwab for custodial, operational, and trading support. In this Snapshot, RIA Clients pertains to the end clients served by RIAs unless specifically noted otherwise. Retail Traders: Schwab Retail Clients defined as clients who trade at least 36 times per year (including ETFs and stocks). Retail Investors: All Schwab Retail Clients except Retail Traders plus Schwab Corporate and Retirement Services end clients (which includes corporate brokerage accounts and employee retirement and stock option plans). These have been grouped with Retail Investors for simplicity. ETF Categories: ETF asset classes are based on Morningstar categories with the following exceptions:
High Yield ETFs were excluded from the U.S. Fixed Income category and are comprised of ETFs with a High Yield Focus as defined by ECS - the Index Universe ETF Classification System. High Yield leveraged and inverse ETFs were excluded from this category and included with other leveraged and inverse ETFs. Dividend ETFs were excluded from the U.S. and International Equity category and are comprised of ETFs with a High Dividend Focus as defined by ECS plus ETFs that use Dividends in the Selection Criteria as defined by ECS. Other ETFs includes Morningstar categories not shown (e.g. International Fixed Income, Currency and Asset allocation).

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