Saturday, September 18, 2010

The ETF Price War

Mutual fundImage via WikipediaThe cost to invest in ETF's has dropped dramatically this year. From the high commission fees of previously years, to sometimes zero commission fees, today. The competition between brokerage houses has benefited the consumer. With the amount of money these companies make it's about time they give a break to the consumer. It really helps the beginning investor the most. Because they're the ones who need the most help in the beginning years of investing. 
My favorite investment company Vanguard has expanded it's ETF line-up with 20 new funds. The most known fund the Vanguard 500 Index Fund now has an ETF version. With an expense charge of only 0.06%. The lowest cost for any S&P 500 ETF. The new funds bring Vanguards ETF offerings to 66. 
This is a great thing for competition in the investing world. Charles Schwab cut expense ratios and removed trading commissions on all it's own ETFs. Fidelity has also waived fees on 25 iShares ETFs. In assets, State Street and iShares are first and second in assets. But Vanguard is third with $103 billion in assets, with a $14 billion increase in assets so far this year. 
All this competition is a great benefit to the consumer. Vanguards new ETFs include an international real estate fund, mini bond funds, and value and growth-style stock funds. 
This is something along time coming. It benefits new investors and old alike. The low expenses and ease of investing will only attract new investors and impact the brokerage houses bottom line for the better. As always for long-term investors, regular index mutual funds with low cost, remain an excellent option. 

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1 comment:

  1. And the winner is..... drumroll please..... the consumer. Isn't competition great!


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