Beginning in August, registered investment advisor The Vanguard Group will be eliminating all its trading fees for ETFs, including those offered by its market competitors like iShares, Schwab and State Street Global Advisors.
It’s the first domino to fall in what could be other giants in the financial sector, such as BlackRock and Charles Schwab offering commission-free trading for all ETF products through their respective online platforms. The Vanguard Group’s move could also signal a shift towards the elimination of management fees for ETF products.
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The move by Vanguard Group would give their users access to more than 100 ETF providers–1,800 ETF products in total relative to the 2,000 available in the marketplace. As ETFs continue to gain even more popularity as an investment vehicle, product differentiation will be a driving factor to capture market share and The Vanguard Group’s elimination of fees is a game-changer in the ETF space.
“This is a significant move by Vanguard,” said Todd Rosenbluth, director of ETF and mutual fund research at CFRA. “Other brokerage firms, such as Schwab or TD Ameritrade, provide commission-free trades on a subset of ETFs, with the asset managers supplementing the cost savings.”