Scottrade kicks its FocusShares ETFs into high gear

Scottrade is celebrating the first birthday of its FocusShares exchange-traded funds with a big marketing push.
JAN 05, 2012
Scottrade is celebrating the first birthday of its exchange-traded funds with a big marketing push. The FocusShares ETF brand soon will be much more visible in print, online and TV sponsorships as the discount brokerage tries to ramp up awareness of the products and their low cost. “So far the focus has been on reaching Scottrade advisers, but now that there's a track record, we're going to reach beyond that,” said Kris Wallace, head portfolio manager of the ETFs. The ads will focus on the low cost of the FocusShares ETFs when compared with the average mutual fund. “Cost is one of the best indicators of future success,” Mr. Wallace said. The 15 FocusShares ETFs, first made available in March 2011, were at the time the lowest-cost ETFs in their respective categories. The FocusShares Morningstar U.S. Market Index (FMU) has an expense ratio of 0.05%, for example, two basis points cheaper than the Vanguard Total Stock Market ETF (VTI). The FocusShares U.S. sector ETFs hit a snag in the bid to be cheapest in its category when State Street Global Advisors cut the expenses on its sector ETFs to 0.18% earlier this year, one basis point cheaper than the FocusShares ones. Mr. Wallace said the firm is reviewing the pricing on its sector ETFs because being low cost is a high priority. Scottrade is following a similar path as Charles Schwab & Co. Inc., which has been able to build the assets in its propriety ETFs to $7 billion, thanks in large part to its built-in client base and commission-free trading. FocusShares still have a ways to go to catch up in assets, however. The entire lineup has less than $100 million in assets, so far. Mr. Wallace expects FocusShares to continue to expand its lineup of ETFs to include fixed-income ETFs, but there is no concrete timetable. “We've been taxed with creating enough ETFs to build a core portfolio, and fixed income is definitely a part of that,” he said.

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