Tom Lydon Discusses the Fidelity-BlackRock ETF Deal

I do the “ETF of the Week” for MarketWatch every Thursday on Chuck Jaffe’s MoneyLife Show where I highlight big movers and disappointments within the exchange traded fund market.

Instead of the normal ETF picks, this week I focused on big changes in the ETF industry, as two powerhouses, Fidelity Investments and BlackRock (NYSE: BLK), announced a new partnership that could have big implications on the growing business. [Fidelity, BlackRock Team Up on ETFs: What it Means]

Click here to listen to the podcast.

To access previous podcasts, take a look at our podcasts category.

Separately, Todd Rosenbluth of S&P Capital IQ was out with a note weighing in on the ramifications of the pact between Fidelity and BlackRock. Here are his thoughts:

  • Partnering with iShares (40% of ETF market) is a big deal. iShares Core Total U.S. Bond Market (NYSEArca: AGG) and iShares Core S&P 500 (NYSEArca: IVV) are among the most popular actively traded ETFs in US.
  • Other platforms (Schwab and TDAmeritrade) tend to have ETFs that have less assets or are from smaller providers like Schwab (NYSE: SCHW) and Guggenheim.
  • The commission fee will help to gather assets as no cost to trade helps offset a higher expense ratio.
  • Partnering with Fidelity on future sector ETFs is a big deal. State Street (NYSE: STT) and Vanguard have more ETF assets in sector products than iShares. Fidelity has a strong brand in sector investing through mutual funds and we think they can have success once they launch ETFs.

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