Schwab stirs up new ETF price war

By Staff | March 13, 2013 | Last updated on March 13, 2013
1 min read

Barely months after slashing its management expense ratio (MER), ETF provider Schwab has reignited the ETF price war with a further reduction, reports

With its latest round of ratio cut, the MER on its U.S. small-cap funds falls to 8%, keeping it cheaper than 10% on rival Vanguard’s small-cap fund.

Read: ETF price wars in Canada?

Inflows in the U.S. small-cap ETFs have risen so sharply that the sales for the first two months of this year, for both providers, have already exceeded those of the entire 2012.

Concerned by the growing media interest in the issue, ETF providers in Canada have gone out of the way to assert price is only a small component of the overall offering and mustn’t be given undue attention.

Investors, goes the argument, should also consider other elements including transparency, tax efficiency, range of offerings and liquidity.

Read: Can you design the next big ETF?

Some have expressed concern that excessive reduction in fees could compromise product structure and adversely impact its performance.

Frequent references are also being made to those stateside ETF providers that went under for relying heavily on lower expense ratios for business growth.

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The staff of have been covering news for financial advisors since 1998.