Fidelity on Tuesday announced it would offer free trades on 25 iShares exchange-traded funds in a partnership with BlackRock ( BLK). The move will help the mutual fund giant cultivate a stickier customer base and stay relevant in the exploding age of ETFs.

While I recently noted that a departing Fidelity executive hinted at proprietary funds ( Fidelity Hints It May Get Into ETFs), today's announcement is a major milestone for the Boston behemoth.

The 25 funds are a predictable bunch, including big-name index brands that could be mistaken for mutual funds at first glance. BlackRock acquired iShares in June.

The iShares Russell 1000 ( IWB) , iShares S&P 500 ( IVV) and iShares S&P Growth ( IVW) will all offer Fidelity traders inexpensive exposure to well-known indices.

Not to be boring, Fidelity will also offer access to other heavily traded ETFs. Also available commission-free will be the iShares MSCI Emerging Markets ( EEM), iShares TIPs ( TIP) and the iShares iBoxx Investment Grade Corporate Debt ( LQD) ETFs.

Too Little, Too Late?

Fidelity's announcement may be an admission of missed opportunities in the ETF space. Vanguard, a competitor in the mutual fund space, has already transformed the ETF industry with low-cost iShares knock-offs.

While Vanguard's most popular funds may not be examples of original thinking, they have shattered the mold in an industry where first-mover status is king. The Vanguard Emerging Markets Stock ETF ( VWO), which goes head-to-head with iShares' EEM, raked in $1.2 billion in 2009, according to data from the National Stock Exchange. EEM, which was introduced earlier, netted $941 million.

The first lesson Fidelity must learn is that ETF investors are a discerning bunch. If they are presented with an identical product at a lower price point, they know how to bargain-hunt.

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