Market Overview

Brokerage Giants Expand In ETF Space

Brokerage Giants Expand In ETF Space

After adding $19 billion last month, exchange-traded products trading in the United States, including ETFs and exchange-traded notes (ETNs) have hauled in $145 billion in new assets through the first nine months of this year – a record for that time frame, according to ETFGI, a London-based ETF research firm.

That suggest while the U.S. ETF industry remains dominated by the “big three” – iShares, Vanguard and State Street – there is still room for able competitors. That secondary group includes brokerage giants Charles Schwab Corp (NYSE: SCHW) and privately held Fidelity. California-based Schwab and Boston-based Fidelity, though both late entrants to the ETF business, are now the seventh- and 22nd-largest U.S. ETF issuers, respectively.

“While Schwab's decision six years ago to add a broad array of low-cost ETFs has helped make it the seventh largest ETF provider at the end of September with $34 billion in assets according to, just ahead of Guggenheim, discount brokerage peer Fidelity was just outside the top-20 with $2.8 billion in assets,” said S&P Capital IQ in a new research note.

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Players In The Sector: Fidelity

Until late 2013, the Fidelity NASDAQ Comp. Index Trk Stk(ETF) (NASDAQ: ONEQ), a NASDAQ Composite tracking ETF, was Fidelity's lone ETF.

That year, the mutual fund giant launched a lineup of 10 sector funds, including the Fidelity MSCI Health Care Index ETF (NYSE: FHLC) and the Fidelity MSCI Information Technology Index ETF (NYSE: FTEC).

The firm followed those launches up with the debuts of several actively managed bond funds and earlier this year, the Fidelity MSCI Real Estate Index ETF (NYSE: FREL) debuted.

FHLC is the largest Fidelity ETF.

Players In The Sector: Schwab

At the end of the third quarter, ETF assets custodied at Schwab climbed 10 percent on a year-over-year basis to $237 billion, according to Schwab Third-Quarter Snapshot. Bond funds have been prolific asset gatherers this year, with fixed income ETFs listed around the world now home to a combined $500 billion in assets under management.

Schwab is getting a piece of that action, as more than half of the company's third-quarter ETF inflows went into bond funds, with a third going into U.S. equity products, according to Schwab data.

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Now And Looking Forward

“Fidelity has more than $162 billion in ETF assets under administration and provides its brokerage customers access to many ETFs, including 70 iShares, that they can buy commission-free online,” according to S&P Capital IQ.

With new additions to the Schwab ETF OneSource commission-free ETF platform, “investors can now buy and sell 214 ETFs covering 66 Morningstar Categories with $0 online commissions, no enrollment requirements and no early redemption fees – key differentiators for investors comparing Schwab ETF OneSource to other commission-free ETF offerings,” said Schwab in a statement.

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