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Schwab Unveils No-Fee Platform For Exchange-Traded Funds
In addition to Ted's fine work, as usual, here is some more information about Schwab’s move. It looks like a win for investors, especially if other supermarkets follow their path. (Disclaimer, all our accounts are now at Charles Schwab. No, I don't work for Schwab...but occasionally, I shill.)
Reply to @mrc70: Certainly. Some of the linked pieces by Ted and me, note that what Schwab has introduced is not new. But most supermarkets have primarily involved their own in house products and/or maybe one other issuer. What I’m hoping for and maybe even anticipating is that now the supermarkets will open things up for more offerings from other companies for free trading on their platforms. If the brick & mortar “discount” brokerages (Fidelity, Schwab, E*Trade, Scottrade, TD Ameritrade) plus T Rowe Price and Vanguard come on board with free trades from the ETF/ETN/UIT/CEF insurers, it’s a win for investors all the way around.
While it’s not pertinent to this thread, this situation has the potential to take even more market share away from traditional actively managed mutual funds, particularly as more actively managed ETFs come on board IF they’re successful. It’s also good news for RIAs because investors will probably need more help with portfolio planning and execution. Rick
Am I the only one who believes that these no-fee deals are not really fee free? Must be the skeptic in me that thinks these free fees are baked in somewhere along the way. Nevertheless trading ETF's beats trading mutual funds on many levels.
It is definitely profitable for brokerages to offer NTF ETFs. BlackRock makes a profit managing the Federal Thrift Savings Plan index funds despite charging an ultra-low 0.025% expense ratio as detailed HERE (use the first WSJ link in the search). The key is the ability of the ETF and index fund managers to earn extra fees by lending equity shares to hedge funds and institutions.
Comments
http://blogs.barrons.com/focusonfunds/2013/02/07/schwab-boosts-commission-free-etfs-to-105/
http://www.indexuniverse.com/hot-topics/15948-schwab-launches-broad-free-etf-trading.html
Tiny URL Tabbed Schwab ETF OneSource list: Domestic Equity, International Equity, Bond, Sector, Specialty, Real Assets
tp://tinyurl.com/bxyjvrz
While it’s not pertinent to this thread, this situation has the potential to take even more market share away from traditional actively managed mutual funds, particularly as more actively managed ETFs come on board IF they’re successful. It’s also good news for RIAs because investors will probably need more help with portfolio planning and execution. Rick
It is definitely profitable for brokerages to offer NTF ETFs. BlackRock makes a profit managing the Federal Thrift Savings Plan index funds despite charging an ultra-low 0.025% expense ratio as detailed HERE (use the first WSJ link in the search). The key is the ability of the ETF and index fund managers to earn extra fees by lending equity shares to hedge funds and institutions.
Kevin