ETF Providers Duke It Out

| About: The Charles (SCHW)

ETFs are taking off and the industry continues to grow. Providers are constantly responding to the needs of investors in an effort to grab a slice of market share.

What exactly are ETF providers doing to outdo their competition and make their products more appealing to investors? One of the more popular ways fund providers have attempted to lure dollars has been to decrease the costs associated with ETF purchase and ownership, says Don Dion for The Street.

This certainly goes a long way toward assuaging the worries that the ETF industry was growing too quickly or had too many products. A natural byproduct of this growth has been this competition that makes it far easier on your pocketbook.

Some of the recent moves include:

  • Schwab (NYSE:SCHW) announced that it was cutting the expense ratios on six of its eight products, thereby making their funds the cheapest within their respective niches. This is their second move to gain interest, as the provider announced that that it would wave commission fees on its new line of ETFs for clients with in-house accounts.
  • In early February, Fidelity announced that it would cut commission fees on 25 iShares products. iShares also appears to be taking aim at share prices in hopes of gaining a leg up on competitors.
  • Vanguard retaliated in May by slashing its own commission fees for its entire line of 46 ETFs.

However, when considering an ETF, cost is not the only factor to consider, though it’s certainly an important one. But it doesn’t differentiate a good fund from a bad one. Other factors to consider are liquidity, trading volume and overall performance record.

How low can the ETF industry go? This has been exciting to watch.

Tisha Guerrero contributed to this article.

Disclosure: None