Fidelity Investments today announced that it will offer its retail customers — and and its registered investment adviser clients via a separate program — commission-free online trades for a suite of 25 iShares exchange-traded funds from
BlackRock Inc.
It also announced that it has reduced its online U.S. equity trade commission to $7.95 for all of its customers, regardless of trading level.
That brings Fidelity's trading commission below that of its chief rivals.
The
Charles Schwab Corp. dropped its commission to $8.95 four weeks ago, TD Ameritrade Holding Corp. charges $9.99, and E*Trade Financial Corp. charges $7.99 to $12.99, depending on a customer's assets and trading frequency.
Fidelity's moves come after Schwab announced in November that it would make its own suit of proprietary ETFs available without a commission.
“This is a major acknowledgement that the now $1 trillion ETF industry has come of age and that Fidelity wants to own it,” said Jim Lowell, editor of the monthly newsletter Forbes ETF Advisor.
The announcement is a “gut shot” to Schwab, E*Trade and TD Ameritrade, he said.
It's also a slap in the face to other ETF providers — particularly the No. 2 and No. 3 ETF providers
The Vanguard Group Inc. and
State Street Global Advisors – in that Fidelity is basically acknowledging iShares as the “pre-eminent” ETF provider, Mr. Lowell said.
The Fidelity program, established in partnership with BlackRock, includes the iShares S&P 500 Index Fund (IVV), iShares Russell 2000 Index Fund (IWM), iShares
Barclays Aggregate Bond Fund (AGG), iShares MSCI EAFE Index Fund (EFA) and iShares MSCI Emerging Markets Index Fund (EEM).
“Fidelity has partnered with the leading ETF provider in the market to bring investors the best brokerage offering in the industry today,” Kathleen Murphy, president of personal investing at
Fidelity Investments, said in a statement. “Simply put, we're offering the broadest selection of commission-free ETFs from the undisputed ETF leader, and it's only available through Fidelity.”
Fred Tomczyk, chief executive at TD Ameritrade, said Fidelity's move doesn't necessarily mean that his firm will offer ETFs with zero commission — or even lower it at all.
Speaking at the Morgan Stanley U.S. Financials Conference in New York on Tuesday, Mr. Tomczyk said most active traders on which TD Ameritrade focuses in the retail space care more about service, technology and trading features than saving a few dollars per trade.
That's why Schwab's move to offer its ETF to its customers commission-free and drop trading commissions have not affected TD Ameritrade's business, Mr. Tomczyk said.
“We see no reason to make a move at this point,” he said. “If we see a reason, we will make a move. Right now, we don't see a reason, and we will drive on.”
Executives from E*Trade did not immediately return phone calls.
