rtmark
LearnBonds.com

Are ‘zero-fee’ ETFs history?

Linda Zhang (pictured), chief executive officer of Purview Investments on ETFs

The $6trn global market for exchange-traded funds (ETFs) is rapidly moving away from its ‘zero-fee’ model that has been the norm for the past two years.

In just a few short weeks, the first and only fund that paid people to invest switched to a new owner and dropped its no-fee policy, while one of the few “zero-fee” ETFs has been shut down completely.

“ETFs have come to a new stage of development where the fee war is only part of the story,” Linda Zhang (pictured), chief executive officer of Purview Investments in New York told Bloomberg. “The next phase of the story is who is able to provide better performing products, net of fee.”

The increasingly competitive landscape that counts with roughly 2,200 ETFs in the US alone has seen issues slash expense ratios amid the intense fight to lure assets.

Salt Financial made headlines last year by releasing the Salt Low TruBeta US Market ETF (LSLT) which would temporarily pay investors, with holders receiving 50 cents for every $1,000 — until it grew to $100m or April 2020 when a $2.90 management fee was introduced.

“The fee war for beta is pretty much over,” Michael Venuto, chief investment officer of Toroso Investments, said. “We’ve seen a lot of people that are done with the fee war and are now interested in, ‘What can I buy that will do better than the market?’”

Last year, he helped Social Finance, an online lender known as SoFi, unveil two funds without fees, the SoFi Select 500 ETF (SFY) and the SoFi Next 500 ETF (SFYX).

SFY currently has $95m in assets and SFYX has $11m . Venuto says the tactic was more for the benefit of SoFi’s existing investors than to attract new ones, and will continue indefinitely for the two products.

Previously, investors enjoyed the benefit of buying into an ETF through their favourite broker for a very small deposit and then paying nothing for its annual management fee.

If zero-fee funds disappear, it wouldn’t necessarily mean a rich new era of profits for ETF issuers. Industry competition remains fierce, especially between giant asset managers like BlackRock and Vanguard, the two largest players.

Last month, BlackRock cut the fees on its largest ETF by one basis point, 0.01%, to match the charges of its rival Vanguard.

By investing in an ETF, you can get returns that are linked to the underlying index after accounting for the fees and other transaction costs. You can find a detailed guide on how to trade in ETFs or refer to our selection of some of the best online stockbrokers.

Trusted & Regulated Stock & CFD Brokers

Rating

What we like

  • 0% Fees on Stocks
  • 5000+ Stocks, ETFs and other Markets
  • Accepts Paypal Deposits

Min Deposit

$200

Charge per Trade

Zero Commission

Rating

64 traders signed up today

Visit Now

75% of investors lose money when trading CFDs.

Available Assets

  • Total Number of Stocks & Shares5000+
  • US Stocks
  • German Stocks
  • UK Stocks
  • European
  • ETF Stocks
  • IPO
  • Funds
  • Bonds
  • Options
  • Futures
  • CFDs
  • Crypto

Charge per Trade

  • FTSE 100 Zero Commission
  • NASDAQ Zero Commission
  • DAX Zero Commission
  • Facebook Zero Commission
  • Alphabet Zero Commission
  • Tesla Zero Commission
  • Apple Zero Commission
  • Microsoft Zero Commission

Deposit Method

  • Wire Transfer
  • Credit Cards
  • Bank Account
  • Paypall
  • Skrill
  • Neteller

Rating

What we like

  • Sign up today and get $5 free
  • Fractals Available
  • Paypal Available

Min Deposit

$0

Charge per Trade

$1 to $9 PCM

Rating

Visit Now

Investing in financial markets carries risk, you have the potential to lose your total investment.

Available Assets

  • Total Number of Shares999
  • US Stocks
  • German Stocks
  • UK Stocks
  • European Stocks
  • EFTs
  • IPOs
  • Funds
  • Bonds
  • Options
  • Futures
  • CFDs
  • Crypto

Charge per Trade

  • FTSE 100 $1 - $9 per month
  • NASDAQ $1 - $9 per month
  • DAX $1 - $9 per month
  • Facebook $1 - $9 per month
  • Alphabet $1 - $9 per month
  • Telsa $1 - $9 per month
  • Apple $1 - $9 per month
  • Microsoft $1 - $9 per month

Deposit Method

  • Wire Transfer
  • Credit Cards
  • Bank Account
All trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.
Galina Mikova

Galina is a Hubspot-certified Technical Writer with over 10 years of experience in working with Fortune 500, private investment, banking, FOREX and niche tech companies as well as crypto and blockchain startups. She has a solid background in FinTech and blockchain technology.