Waiving commissions on ETFs not a big draw, study finds

Firms need not offer exchange-traded funds commission-free — or at a discount — to accumulate ETF assets.
MAY 04, 2010
Firms need not offer exchange-traded funds commission-free — or at a discount — to accumulate ETF assets. That's the take-away of a study released today from Phoenix Marketing International, an industry consultant. “Almost 64% of affluent investors who currently or intend to invest in ETFs place the highest importance and relevance on funds that complement their strategic, versus technical, investing style, that track large market indices, are offered through a full-service brokerage and can be traded online,” Kristina Terzieva, director of syndicated financial services at Phoenix, said. “Waiving commissions for a limited number of ETFs, for only branded ETFs or ETFs offered by a specialist broker have minimal impact insofar as reaching additional investors.” Phoenix surveyed 924 brokerage and fund investors in February with investible assets — excluding employer-sponsored plans — of at least $100,000. The survey's findings come on the heels of price war among ETF providers. Last month, Fidelity Investments began offering its retail customers — 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 reduced its online U.S. equity trade commission to $7.95 for all of its customers, regardless of trading level. Fidelity's moves came after The Charles Schwab Corp. announced in November that it would make its own suite of proprietary ETFs available without commissions. The Phoenix study echoes comments by financial advisers who said they wouldn't invest in an ETF merely because it was commission-free.

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