But the big news for Schwab lately has been its major push into the exchange-traded fund market. After having been the first to offer commission-free ETFs in 2009, Schwab recently expanded its offerings with its ETF OneSource marketplace, with more than 100 different ETFs from multiple ETF providers, including No. 2 industry player State Street Corporation (NYSE:STT). The move not only gives State Street's SPDR line of ETFs a dedicated distribution channel but also helps Schwab go up against rival broker TD Ameritrade Holding Corp. (NYSE:AMTD), which was the first to offer a 100+ fund menu of commission-free ETFs on its platform.
Schwab has also sought to expand its financial product offerings, most recently by offering a variable annuity geared at generating retirement income. Rival financial companies Hartford Financial Services Group Inc (NYSE:HIG) and Genworth Financial Inc (NYSE:GNW) have reined in their annuity offerings, with Hartford suspending all new sales and seeking to buy out some of its variable annuity holders, and Genworth having stopped selling retail and group variable annuities a couple of years ago. Both companies suffered from adverse conditions in the annuity market during the financial crisis, but Schwab sees promise in the products, which will be backed by insurer Pacific Life.
For Schwab to improve, it needs to see further gains in customer activity and do a better job of converting that activity to revenue and income. With a favorable stock market, Schwab needs to take advantage before a market reversal sours investors once again.
The article Has Schwab Become the Perfect Stock? originally appeared on Fool.com and is written by Dan Caplinger.
Fool contributor Dan Caplinger owns warrants on Hartford Financial. The Motley Fool recommends TD Ameritrade.
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