This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Vanguard Cuts Fees on ETF Trading

Stocks in this article: SSTMORNFAA

NEW YORK ( TheStreet) -- Vanguard, which has made its mark in the ETF and broad financial realm by offering some of the lowest priced financial products around, raised the bar this week when it unveiled a plan to offer commission-free trading on any of its 46 Exchange traded funds for brokerage clients.

It is the third company to slash trade commission fees on ETF products since the end of 2009.

Cutting commission fees as a marketing plan started when Charles Schwab (SCHW) used it to make a new line of ETFs attractive to its customers against products from larger, more established competitors such as State Street and iShares.

The move quickly paid off when, after only five months after they were launched, Schwab's ETF suite surpassed $1 billion in assets.

Soon after, Fidelity followed Schwab's lead by offering commission free trading for 25 of the most popular iShares ETFs.

With Vanguard now joining the fray and slashing its own trading commission fees, it is evident that this idea, which began as a marketing strategy, is fast becoming commonplace among top brokerage firms.

Just days after Vanguard announced their plan, Scott Burns, director of ETF analysis at Morningstar predicted that State Street's SPDRs will be the next line of funds to have their commission fees axed.

Slashing commission fees is a good way for companies like Vanguard to hold onto clients and also provide dedicated Vanguard investors with an even cheaper trading experience. However, in the longer term, this move may prove detrimental to the overall diversity of the ETF arena, ultimately leaving investors with fewer options to choose from.

In the past, any new ETF providers could gain a footing in the ETF industry by offering customers unique and exciting new products.

Big players like State Street and iShares have been able to dominate the ETF industry because they were first movers or large enough to offer lower expense ratios. Smaller boutique ETF providers such as Claymore and WisdomTree, on the other hand, have had to win over fans and draw in assets by offering exposure to new and unique market slices bypassed by other firms.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,740.35 +62.45 0.37%
S&P 500 1,957.91 +7.09 0.36%
NASDAQ 4,465.0210 +12.2290 0.27%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs