Fidelity Has A Say In ETF Fee Tussle

October 13, 2016 8:30 am
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News about fee reductions in the exchange-traded funds industry often has a domino effect. For example, last week BlackRock, Inc.(NYSE: BLK)’s iShares unveiled a significant round of fee cuts for iShares core suite of ETFs.

BlackRock, the world's largest asset manager, launched the iShares core ETFs four years ago, targeting cost-conscious, long-term investors. The iShares core lineup is now comprised of 22 ETFs and iShares, the world's largest ETF issuer, is lowering expense ratios on 15 of those funds.

That move was followed by Charles Schwab Corp (NYSE: SCHW) saying last Friday it lowered fees on five of its ETFs, which were already among the industry's least expensive.

Fidelity Responds

Fidelity is not taking the move by Schwab standing down. On Wednesday, the Boston-based funds giant said it is now offering all 18 iShares core ETFs on a commission-free basis. Fidelity features an expansive commission-free ETF platform that includes only Fidelity and iShares ETFs by virtue of the company's partnership with iShares, the world's largest ETF issuer.

“All of these ETFs have a lower expense ratio than Vanguard and State Street counterparts, and Fidelity is the only provider that offers all 18 iShares Core ETFs commission-free to advisors and investors,” said Fidelity in a statement.

Related Link: A High-Flying Industrial ETF

Members of the iShares core lineup include popular ETFs, such as the iShares Barclays Aggregate Bond Fund (NYSE: AGG), iShares Core High Dividend ETF (iShares Trust (NYSE: HDV)) and the iShares S&P 500 Index (ETF) (NYSE: IVV).

This is not the first step Fidelity has taken to bolster its low-cost credentials in the ETF space.

As of July 1, Fidelity's 11 sector ETFs will charge 0.084 percent per year, or $8.40 for every $10,000 invested. That is down from the ETFs' original expense ratio of 0.12 percent a year. Fidelity clients can enjoy added cost savings because the firm's sector ETFs, among other ETFs, are available to its clients on a commission-free basis.

Said another way, Fidelity's sector ETFs are even less expensive than those issued by rival Vanguard.

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