Exchange traded funds (ETFs) are known for their low costs, and those costs are rapidly getting lower as brokerages waive fees for in-house trading and popular ETFs cut their expense ratios. But how low is too low?
ETF trading fees are constantly plummeting, but many wonder if this is a good thing. Of course, investors are benefiting from getting the best possible product at the best price. Many providers are realizing that investors who are just starting out or who don’t have much capital to start with could be turned off by high commissions. But eventually, fees and commissions will hit a bottom. [ETF Providers Duke It Out With Free Trades.]
In essence, this fee-free trading was introduced to attract the smaller, individual investor, and to create a provider-investor relation of value and trust. A recent round table discussion introduced a few views on the matter. For one, Schwab Senior Vice President Peter Crawford stated that this trend is expected to continue and that it may be the norm for most of the industry for the time being. [Schwab’s New Bond ETF Trades With No Fees.]
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.