(Bloomberg News)
Reducing online trade commissions is a way to strengthen clients' commitment to the company, according to Schwab CEO Walt Bettinger. (Bloomberg News)

In an attempt to get a leg up on competitors, Charles Schwab announced it will cut commissions on 18 index mutual funds and ETFs .

The company will reduce its standard online equity and ETF trade commissions from $8.95 to $6.95, making Schwab’s trading commission the lowest among competitors including Fidelity, Vanguard, TD Ameritrade and E*Trade, the firm said in a statement.

“Two of the irrefutable truths when it comes to investing are that costs matter and complexity can negatively affect returns,” said Walt Bettinger, president and CEO.

As technology lowers operating costs, reducing online trade commissions is a way to strengthen clients’ commitment to the company, Bettinger said.

“Indexing is the simplest, easiest, cheapest way for the average American to build personal wealth,” said chairman and long-time proponent of index investing Charles Schwab. “With today’s news, we’re making it even easier for mainstream investors to build indexed portfolios.”

Starting March 1, Schwab will lower fees on market cap-weighted index mutual funds to align with their ETF equivalents. The firm says this will ensure the smallest investor can invest at low costs historically available only to large institutions, the statement said.

Schwab will also lower expenses on Schwab U.S. TIPS ETFs and Schwab Fundamental Index ETFs, according to the release.

The price cuts are Schwab's most recent volley in an ongoing industry-wide price war. Schwab and competitors Vanguard and Fidelity are among providers drastically cutting fees in order to attract money to the ETF market — which drew $162 million from investors in 2016, according to Bloomberg data.

In addition to cutting fees, Schwab says it is initiating a "satisfaction guarantee" program. If a client is not satisfied with their investment for any reason, Schwab will refund any related commissions, transaction fees or advisory program fees paid to the firm.

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