| NEW YORK
NEW YORK Oct 7 Charles Schwab Corp on
Friday said it was again cutting the fees on five of its
exchange-traded funds, slicing expenses just days after a
similar move by rival BlackRock Inc.
Two days earlier, BlackRock said it was reducing prices on
15 U.S. iShares ETFs by up to 0.05 percent.
San Francisco-based Schwab came later to ETFs than its
rivals, but has grown its share of the market by offering funds
at low cost and cutting fees competitively. Last November, for
instance, Schwab announced a fee cut on a fund just hours after
BlackRock made a similar move.
Schwab's latest moves bring fees down to as low as 0.04
percent per year, for its Schwab U.S. Aggregate Bond ETF
, or $4 for every $10,000 managed.
That is lower than the 0.05 percent fee on iShares Core U.S.
Aggregate Bond ETF, which BlackRock this week lowered
from 0.08 percent. Both funds track a broad segment of the bond
Overall, the changes will bring annual fees down by 1
hundredth of 1 percent on Schwab ETFs with $18 billion in
assets. Schwab manages $54 billion in U.S. ETF assets.
BlackRock's fee cut affected about 23 percent of iShares'
$937 billion in U.S. assets.
Both price cuts come ahead of a new U.S. Labor Department
rule governing retirement products takes effect. That rule,
announced in April and effective next year, sets a so-called
fiduciary standard for financial brokers who sell retirement
products, requiring them to put clients' best interests ahead of
their own bottom line.
The language in the new rule is tougher than an existing
rule that only requires brokers to ensure products are
"suitable." The requirements are widely seen pushing more money
to lower cost investments.
Even before that rule, segments of the fast-growing ETF
business had become viciously competitive on price, with fund
lineups including Schwab's, Vanguard's and iShares' lower-cost
"Core" funds all slicing fees closer to zero.
All three are thriving as investors have moved money from
stocks - as well as fund managers who pick them - to index funds
that hold the entire market.
Many, but not all, ETFs are low-cost index funds. In the
United States, the funds have taken in $160 billion so far this
year, according to FactSet Research Systems Inc.
(Reporting by Trevor Hunnicutt; Editing by David Gregorio)