MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication
an InvestmentWires' Publication
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MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication |
|
Monday, September 24, 2012 What Are the Bigger Effects of Schwab's ETF Fee Cuts? Walt made himself heard on Friday. It seems like there's no end to the coverage of Charles Schwab [profile] slashing its ETF fees. [Read MFWire's coverage here.] Media including Reuters, the Wall Street Journal, MarketWatch and Bloomberg highlighted the uncanny timing of the announcement just after BlackRock announced fee cuts for its iShares ETFs to compete with Vanguard's low-priced ETFs, which have lately been stealing the show. "It looks like there's a race to the bottom," Tom Lydon of Irvine, California-based Global Trends Investments told RIA Biz on Friday, a view echoed by Benzinga coverage of the fee cuts. Publications also noted Walt Bettinger's claim that this fee cut was not made in direct response to competitors. But the greater message here, says a MarketWatch commentary, is that index-based, basic ETFs are, in essence, "financial spaghetti." Chuck Jaffe writes, If you want to make a pasta dinner, you go to the store, look at a few shapes and sizes and a couple of different brands; everything is priced within a few pennies, except for some premium brands that promise a different experience from what you get from a box of dry noodles.Plus, add to this that any benefit investors will see from the fee cuts is relatively low. For example, the cut on Schwab's dividend fund would save an investor just $10 a year on a $10,000 investment, notes Reuters. MarketWatch's example is that the 50 percent reduction in Schwab U.S. Large Cap ETF to 4 basis points only saves investors 40 cents on every $1,000 they keep in the fund for a year. Media also note that analysts from several firms downgraded Charles Schwab on Friday, the most notable of which was Evercore rating Schwab underweight with a price target of $12. Share prices dropped 50 basis points that day. Other media that covered the Schwab announcement and its repercussions include InvestmentNews, Dow Jones Newswires, the Financial Times, the San Francisco Chronicle, the San Francisco Business Times and ETF Trends. Printed from: MFWire.com/story.asp?s=41361 Copyright 2012, InvestmentWires, Inc. All Rights Reserved |