“The ETF price war affects everyone else in the business as well,” the chief executive of one major US investment group, who declined to be named, told Financial Times.
If mutual fund players can’t beat ETFs, then many are opting to join them. More recently, established and new entrants to the ETF market, like Franklin Templeton, Deutsche Bank Asset Management, Charles Schwab, State Street and Vanguard, have all rolled out new cheaper ETFs or cut down costs on older products.
For example, Charles Schwab offers one of the cheapest ETFs on the market with a 0.03% expense ratio. Vanguard recently registered for a suite of factor-based ETFs, which may be a prelude to its intent on bringing the fee war to the smart beta ETF category.
The launch “was the latest salvo in these price wars, and another sign that the battle is not just being fought in the plain vanilla products”, Ben Johnson, head of ETF research at Morningstar, told FT.
For more information on ETFs, visit our ETF 101 category.