Charles Schwab and Fidelity Investments announced dueling plans to expand their commission-free ETFs, escalating a price war to win investors.
Schwab will double its suite of no-commission ETFs starting March 1, bringing its total to more than 500. Fidelity is nearly doubling the number of ETFs on its platform to more than 500 products, including additional iShares ETFs as of Feb. 28. Both companies announced their plans Tuesday.
Investors have poured cash into cheap index funds and ETFs as pricier actively managed products fail to beat benchmarks. Today’s moves come six months after Vanguard rocked the industry by announcing it would begin offering almost 1,800 ETFs commission-free to online customers on its brokerage platform.
“However ironic it may seem, the Vanguard effect is now hitting ETF trading as all the platforms look to keep up with their bombshell announcement last year that all ETFs can be traded for free,” Bloomberg Intelligence analyst Eric Balchunas said.
BlackRock’s iShares products are an anchor of Schwab and Fidelity’s plans. BlackRock is the world’s largest ETF issuer and Fidelity began working with the firm in 2013 to offer customers some iShares ETFs commission-free.
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The free trades are available on the firm's Merrill Edge platform.
January 30 -
As the demand for more specialized products increases, the largest ETF providers are continuing their race to the bottom.
February 11 -
The firm plans to expand access to its line of low-cost funds to roughly 1,800, including those from BlackRock, Schwab and SSgA.
July 2
IShares will be added to the Schwab platform, with 90 funds. Several fund issuers including State Street Global Advisors, Invesco, WisdomTree Investments, J.P. Morgan Asset Management and Pimco will add to their commission-free offerings already on the platform.
Kari Droller, vice president of third-party platforms for Schwab, said iShares is an important brand to the firm’s clients. “It adds a really big brand to the platform so we’re excited to have them join,” she said in an interview.
Fidelity’s expansion also will give investors more options with smart beta and active ETF products from more than 10 asset managers in the coming months. The firm’s existing suite of ETFs includes factor, actively-managed bond, passive equity and sector ETFs.
Fees were nearly half the price of the top-performing active funds.
Greg Friedman, head of ETF management and strategy at Fidelity, said that the move is about better serving clients.
“That’s why we came out with zero fee funds. This is just a continuation of that same strategy for the benefit of our clients,” he said.
Last year, Boston-based Fidelity startled the industry by offering some zero-fee index mutual funds. That move, and the recent elimination of commissions, have spurred speculation about whether a zero-fee ETF will come soon.
