Credit: Shutterstock photoDrew Voros
ETF.com Editor-in-Chief
Vanguard, the fund issuer known for its plain-vanilla index-based products and low costs, announced today it will be slashing investor costs on its trading platform for nearly all ETFs.
The firm has long offered commission-free trading on its own ETFs, but now expects to offer commission-free ETF trading on roughly 1,800 ETFs starting in August on online trades.
"This is an unexpected move by Vanguard, and absolutely the next salvo in the ETF fee war," said Dave Nadig, managing director of ETF.com. "Like the other salvos we've seen, I wouldn't expect this one to go unanswered."
The Vanguard announcement notes that the inverse and leveraged ETFs, which the press release describes as “highly speculative and complex,” will not see their trading commissions waived. Previously, Charles Schwab had offered the largest commission-free trading program, with more than 200 from a variety of issuers.
SEC Back Major ETF Rule Change
Last week the Securities and Exchange Commission voted unanimously to propose the long-expected "ETF Rule," which, if adopted, would greatly reduce the time and costs needed for issuers to bring products to launch.
Proposed Rule 6c-11 would allow ETF issuers to launch funds without having to first obtain from the SEC what is known as "exemptive relief" from stipulations laid out in the Investment Company Act of 1940 (also known as the 1940 Act). It would also rescind all previously given exemptive relief to ETFs that would otherwise be covered by the new rule (read: "SEC Considering Major ETF Rule Change").
The proposed rule, which would apply to any ETF structured as an open-ended fund, would cover passive as well as active ETFs. It would not, however, apply to unit investment trusts—the structure behind the SPDR S&P 500 ETF Trust (SPY), ETFs structured as a share class of a multiclass fund (e.g., Vanguard funds) or leveraged and inverse ETFs.
It also makes custom creation/redemption baskets available to all ETFs covered under the proposed rule, a level-setting change that could have significant benefits for newer entrants into the space.
A similar rule without the creation basket amendment was first introduced in 2008, but was shelved as the financial crisis began to pick up steam.
New Gold Fund Sibling Of GLD
State Street Global Advisors and the World Gold Council teamed up to launch a smaller-size version of GLD that represents 1/100 of an ounce of physical gold. The lower-priced physical gold ETF SPDR Gold MiniShares Trust (GLDM) could best be described as the little sibling of the SPDR Gold Trust (GLD).
The new gold ETF comes with an expense ratio of 0.18%, while GLD charges 0.40%. Like GLD, however, GLDM lists on the NYSE Arca. GLDM is also cheaper than the $11 billion iShares Gold Trust (IAU), which comes with an expense ratio of 0.25%. Like GLDM, IAU tracks the price of 1/100 of an ounce of gold.
GLDM’s lower handle means the fund will be more accessible to smaller investors, who might balk at the high share price of GLD, which tracks the price of a full ounce of gold.
Drew Voros can be reached at dvoros@etf.com
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
