This Day On The Street
Continue to site
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

ETF Providers Look for an Edge

NEW YORK ( TheStreet) -- Over the past year, ETF providers and sponsors have taken increasingly bold steps in their attempts to make their products more attractive when compared to competitors. One of the more popular ways fund providers have attempted to achieve this goal has been to decrease the costs associated with holding the funds.

While cheap costs will certainly make using ETFs less of a financial burden on investors, the cheapest products are not always the best. Investors must be careful not to fall for marketing gimmicks that can result in the formation of a portfolio made of less than ideal holdings.

Early last week, Schwab (SCHB) announced that it was cutting the expense ratios on six of its eight products, thereby making their funds the cheapest within their respective niches.

This is actually the second cost-cutting measure to come from the firm. When Schwab, a relative newcomer to the ETF arena, first came onto the scene, it was forced to go toe-to-toe with established fund providers including State Street (STT - Get Report) and iShares. In order to set itself apart from these competitors, Schwab announced that that it would wave commission fees on its new line of ETFs for clients with in-house accounts.

In response to Schwab's decision to slash commission fees, other firms have followed suit with their own expense-cutting measures.

In early February, Fidelity announced that it would cut commission fees on 25 iShares products. Not to be outdone, Vanguard responded in May by slashing its own commission fees for its entire line of 46 ETFs.

Aside from Schwab's move to reduce the expense ratios of a number of its funds, iShares also appears to be taking aim at share prices in hopes of gaining a leg up on competitors. In the past, iShares COMEX Gold Trust (IAU) has been a popular product, but has lagged in size behind the SPDR Gold Shares (GLD). In an effort to attract new assets, IAU went through a 10-for-1 share split at the close of trading yesterday, reducing the price of each individual share. Before, IAU, GLD and ETFS Gold Shares (SGOL) all had prices over $120 per share, but now IAU will trade for just over $12 per share. Although internally the fund remained unchanged, by making individual shares cheaper, IAU may appeal to investors looking to purchase gold in larger share blocks.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
GLD $123.65 0.00%
IAU $12.48 0.00%
IVE $91.72 0.00%
SCHV $43.76 0.00%
SCHB $49.56 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs