Commission Free ETFs: Too Good To Be True? (SCHB, SCHX, SCHA, SCHF)

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Can it be true? Are there ETFs that not only have low expense fees and can be bought and sold at will, but also are free to trade with no commissions?!

The answer is yes...

Charles Schwab is the first brokerage to unveil 'free ETFs', that for Schwab customers who trade on-line will be free to trade with no restrictions. This is boon to individual investors and advisors who had to choose between the transaction costs of ETFs or the higher management and marketing fees of mutual funds.

Schwab's first 4 free ETFs were introduced yesterday, U.S. Broad Market (NYSE: SCHB), U.S. Large-Cap (NYSE: SCHX), U.S. Small-Cap (NYSE: SCHA) and International Equity (NYSE: SCHF). 4 additional free ETFs will be launched in early December.

If other brokerage houses follow suit, this would be huge change to the industry and should inflict a big blow to the mutual fund and traditional ETF industries.


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