A Chance Encounter

November 2015

A few weeks ago, on a flight out of San Francisco, a well-known entrepreneur—someone who created a service we all know and use, and who generated a huge amount of wealth for himself and his company’s investors—sat down next to me. We started chatting. He asked what I did and I told him about Charles Schwab Investment Management. At some point in the conversation I mentioned exchange-traded funds (ETFs) and the entrepreneur confessed he didn’t really know what an ETF was.

I was surprised to hear this, and spent most of the flight thinking about it. It struck me that many of the products, services and industry terms that we take for granted (and use acronyms to discuss) are not very well understood by a large portion of the general public or even by some successful investors. And that’s a problem. Why? Because investing is too important to be left to chance. It’s how millions of Americans like you and me strive to support our families, build a future, and achieve personal financial freedom. As our founder Chuck Schwab says, “Wealth creates freedom, and investing can create wealth.” That’s why I decided to create this blog—a place to confirm what you already know, challenge what you think you know and make sense of what you might not know.

Some of the topics and trends that I’ll explore here include the chase for yield, which has some investors and fund managers introducing new and different risks into their portfolios. I’ll discuss the emerging questions about liquidity—how easy it will be to buy and sell investments when interest rates rise—and help you determine if your fund is living up to its objectives. I’ll also tackle the debate about active versus passive (meaning index-based) management of investments. I’ll explain why it’s so important to really understand what you are paying in fees, and how the compounding of these costs can eat away at a nest egg. And, of course, I’ll talk about how ETFs work and how to decide whether they are right for you.

The beauty in simplicity

My goal is simple: to use my 30 years of experience in the investment industry to make investing easier to understand and, hopefully, more rewarding for you.

"My goal is simple: to use my 30 years of experience in the investment industry to make investing easier to understand and, hopefully, more rewarding for you."

I am passionate about supporting investors like you. That’s why I’ve dedicated my career to this industry—from establishing a global fixed income research organization at a major Wall Street firm, to working for the Federal Reserve, to managing money. And now I have the privilege of being at the helm of Charles Schwab Investment Management, one of the largest money managers in the country with a long history (25 years, to be exact) of making investing easier and less expensive. In fact, Chuck Schwab founded CSIM, as we call it, to realize his belief that investors needed a simple and low-cost way to achieve broad exposure to all elements of the market—without having to be millionaires. His first fund, the Schwab 1000® Index Fund, did just that, and continues to offer these important benefits to this day.

When I’m not at work, I spend most of my time on my Northern California cattle ranch that I own with my husband. Many people are surprised to hear this—they find the investing and ranching worlds incongruous—but I am constantly reminded of the similarities between the two. Both require focus, perseverance, long-term planning and ongoing engagement. In addition, both are generally regarded as being a man’s domain.

The democratization of investing

That brings up another topic that I’m passionate about: There’s a dearth of women in asset management, but there needn’t be. Look at medicine and law: The percentage of women physicians in the U.S. increased from less than 10% in 1970 to 32.4% by 2010. During that same time period, the percentage of women lawyers in the U.S. grew to 33.4%, from less than 5%.1 And yet I just saw a recent Morningstar report that revealed that only 9% of portfolio managers at U.S. open-ended mutual funds are women, and they control only 2% of all assets.2 This is important because every industry and every business can benefit from a more diverse range of experiences and points of view.

Opening up the discussion on a variety of topics and different aspects of investing is a critical part of this blog. The investment arena is full of confusing terms, conflicting advice, and topics that are either complicated or opaque, or both. If you’ve ever struggled to understand an investing strategy, read a financial article that left you with more questions than answers, or simply wondered about a certain financial asset class or product, let this place be a resource for you. Don’t just wait to run into me on your next flight.

Marie Chandoha

President and CEO, Charles Schwab Investment Management

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