Schwab to Acquire Windward Investment Management

The Charles Schwab Corporation is paying $150 million in stocks and cash for Windward Investment Management, an exchange-traded fund (ETF)-focused investment advisory firm headquartered in Boston.  

The acquisition will enable Schwab to expand its’ business in the rapidly growing field of ETFs.  As of July 31, Windward managed $3.9 million in assets, held in three investment portfolios primarily made up of ETFs.  

The deal is expected to close in the fourth quarter.  Upon closing, Windward’s money management solutions and ETF-based portfolios will be made available to clients of independent registered investment advisers (RIAs), retail clients, as well as independent investors. Stephen J. Cucchiaro, the founder, president and chief investment officer of Windward, along with his investment team, will remain with the firm to maintain and oversee the investment and portfolio management processes in place today. 

“Among independent advisers and retail investors there is a growing interest in the kind of value Windward can provide – portfolio construction which puts risk management at its core–an ideal approach for today’s world,” said Walt Bettinger, Schwab president and chief executive officer. “A number of Schwab Advisor Services clients currently rely on Windward for cost-effective and highly diversified core portfolio holdings for their clients, and we think that upon closing streamlined access and improved pricing from Schwab will further fuel Windward’s growth and enable us to add significant client value for advisers.” 

In a statement, Schwab said it expects the acquisition to show “modest” gains during the first 12 months after the deal closes. Schwab had seen a 38% jump in ETF usage among its clients from June 2009 to June 2010, and it expects those numbers to continue to climb.  

In July, Schwab posted flat second-quarter profit but showed signs of emerging from the damage inflicted by low interest rates and money-market fund fee waivers.