WSJ: Fidelity's ETF Fee Spurs a Backlash

Investor

http://online.wsj.com/article/SB10001424127887324392804578360800747665608.html?mod=ITP_moneyandinvesting_0

If you cannot access the article through above link try the following Google search:

https://www.google.com/search?q=Fidelity's+ETF+Fee+Spurs+a+Backlash

Fidelity on Wednesday announced it would begin offering 65 ETFs from BlackRock Inc.'s iShares unit without charging customers a trading commission. The deal expands a previous agreement involving 30 commission-free ETFs.

But the Boston money manager is tacking on an additional fee of $7.95 a trade to investors who sell the ETFs within 30 days and to financial advisers who sell within 60 days.

Advisers also complained that Fidelity replaced 10 of the commission-free iShares ETFs on its previous menu. Nine of the new ETFs have lower trading volumes, suggesting they are less popular with investors.

Here is link to Fidelity about the iShares ETFs: https://www.fidelity.com/etfs/ishares

Note: A short-term trading fee of $7.95 will be charged for any sales that occur within 30 days of the original purchase of the ETF. This fee is being waived for all customers through July 31, 2013.

Sven

Advisers also complained that Fidelity replaced 10 of the commission-free iShares ETFs on its previous menu. Nine of the new ETFs have lower trading volumes, suggesting they are less popular with investors.

Always wonder how these free iShares benefit Fidelity? News above is not encouraging.

msf

Reply to @Sven:

"Always wonder how these free iShares benefit Fidelity?"

From Fidelity:

For iShares ETFs, Fidelity receives compensation from the ETF sponsor and/or its affiliates in connection with an exclusive, long-term marketing program that includes promotion of iShares ETFs and inclusion of iShares funds in certain FBS platforms and investment programs. Additional information about the sources, amounts, and terms of compensation is described in the ETF's prospectus and related documents. Fidelity may add or waive commissions on ETFs without prior notice.

In addition, Fidelity can still make money on the spread. (They may earn a pittance on every trade but make it up in volume, to paraphrase an old joke.)