FocusShares, the Montvale, N.J.-based exchange-traded fund firm
that's on the verge of rolling out a broad new lineup of 15 U.S.
equity funds, has priced some of its funds to undercut competing
products from the ETF industry's leading low-cost providers,
Vanguard and Schwab, according to a regulatory filing.
FocusShares' Morningstar US Market Index ETF (NYSEArca:FMU) will
undercut the Schwab U.S. Broad Equity ETF (NYSEArca:SCHB) by 0.01
percentage point, which will make it the cheapest ETF in its
segment once it launches. Also, its Morningstar Large Cap Index ETF
(NYSEArca:FLG) undercuts Vanguard's S&P 500 ETF (NYSEArca:VOO),
also making it the cheapest ETF in its segment.
FocusShares parent, Scottrade, said in December that the ETF
company was likely to roll out the new funds early in 2011, and
today's filing makes it look like the rollout is coming soon. The
company revealed tickers in a filing in early February. The
revelation of tickers and prices of ETFs often suggests that the
rollout of a particular fund or group of funds is near, if not
imminent.
The arrival of another low-cost ETF provider is likely to keep
downward pressure on ETF expense ratios in general. Moreover,
industry sources say Scottrade will offer its customers free
trading on the new FocusShares ETFs, though a Scottrade official
declined to comment on that in a telephone interview with
IndexUniverse.com in December. Both Schwab and Vanguard offer
commission-free ETF trading to clients buying and selling their
respective proprietary ETFs.
The low-cost strategy appears to be working for both Vanguard
and Schwab. Vanguard, which led all other ETF firms last year in
asset gathering, is now the No. 3 U.S. ETF firm, with $156.69
billion in assets as of Feb. 25. Schwab, a relative newcomer to the
ETF industry, began its product rollout in November 2009, and its
growing lineup has raked in almost $3.46 billion since then,
according to data compiled by IndexUniverse.com.
FocusShares' 15 planned funds use Morningstar indexes and cover
just about every investment sector and style in the U.S. equities
universe.
Competing On Price
The tickers and prices of FocusShares funds in competition with
funds from Schwab and Vanguard are:
- Focus Morningstar US Market Index ETF:(NYSEArca:FMU), 0.05
percent. That's cheaper than both the 0.06 percent cost of
Schwab's "SCHB" and the 0.07 percent cost of the Vanguard Total
Stock Market ETF (NYSEArca:VTI).
- Focus Morningstar Large Cap Index ETF:(NYSEArca:FLG): 0.05
percent. That's less expensive than VOO's 0.06 percent expense
ratio and the 0.08 percent cost of the Schwab U.S. Large Cap ETF
(NYSEArca: SCHX)
Expense ratios of the other 13 other FocusShares ETFs are as
follows:
- Focus Morningstar Mid Cap Index ETF (NYSEArca:FMM), 0.12
percent
- Focus Morningstar Small Cap Index ETF (NYSEArca:FOS), 0.12
percent
- Focus Morningstar Basic Materials Index ETF (NYSEArca: FBM),
0.19 percent
- Focus Morningstar Communications Services Index ETF
(NYSEArca: FCQ), 0.19 percent
- Focus Morningstar Consumer Cyclical Index ETF (NYSEArca:
FCL), 0.19 percent
- Focus Morningstar Consumer Defensive Index ETF (NYSEArca:
FCD), 0.19 percent
- Focus Morningstar Energy Index ETF, (NYSEArca FEG), 0.19
percent
- Focus Morningstar Financial Services Index ETF (NYSEArca:
FFL), 0.19 percent
- Focus Morningstar Health Care Index ETF (NYSEArca:FHC), 0.19
percent
- Focus Morningstar Industrials Index ETF (NYSEArca:FIL), 0.19
percent
- Focus Morningstar Real Estate Index ETF (NYSEArca:FRL), 0.12
percent
- Focus Morningstar Technology Index ETF (NYSEArca:FTQ), 0.19
percent
- Focus Morningstar Utilities Index ETF (NYSEArca:FUI), 0.19
percent
A New Beginning
FocusShares, which abandoned its tactical suite of products
after the 2008 market crash, unveiled its new broad-based asset
allocation strategy in a filing in December with the Securities and
Exchange Commission. The ETF firm became a unit of St. Louis-based
online discount trading firm Scottrade in June 2010.
Scottrade's acquisition of FocusShares appears to be the
financial centerpiece of FocusShares' comeback plans. The company's
former lineup of ETFs included funds focused on homebuilding and
Walmart supplier companies.
In an October 2008 interview with IndexUniverse.com, FocusShares
Chief Executive Officer Erik Liik said the market environment was
no longer hospitable to niche the company's strategies, and that
FocusShares aimed to retool itself as a purveyor of broad
investment solutions.
"There's just no economy to support those [tactical] products
now, so investing in the long-term future is a better approach for
us," Liik said in the 2008 interview.
An official at Scottrade declined to discuss the terms of the
transaction with IndexUniverse.com in a telephone interview last
month.
Don't forget to check IndexUniverse.com's ETF Data
section.
Copyright ®
2011 Index Publications LLC
. All Rights Reserved.