×
Newsmax TV & Webwww.newsmax.comFREE - In Google Play
VIEW
×
Newsmax TV & Webwww.newsmax.comFREE - On the App Store
VIEW
Tags: no | fee | etf

ETF Fees Are Falling to Zero as SoFi Plans First No-Cost Funds

abbreviation ETF on the background of one hundred dollar bills
(Timbrk/Dreamstime)

Monday, 25 February 2019 11:46 AM EST

The first free exchange-traded fund is on its way.

Social Finance Inc., the online lender known as SoFi, is helping start two new ETFs that won’t charge a management fee, according to regulatory filings. The funds, which plan to waive charges for at least the first year, will focus on U.S. stocks.

With more than 97 percent of cash flowing to ETFs going to those that charge $2 or less for every $1,000 invested, issuers are under pressure to keep costs to a minimum. SoFi is a new contender in the fee war, after Fidelity Investments made waves when it started the first free mutual funds last year and saw assets in those products quickly grow to $1 billion. Free funds are loss leaders for issuers, which are betting customers attracted by the low-cost offerings will eventually buy more expensive funds or services.

Investors currently pay 30 cents for every $1,000 invested in the cheapest ETFs from BlackRock Inc., State Street Corp. and Charles Schwab Corp. Together these three issuers control 60 percent of the $3.7 trillion market in U.S. ETFs. Vanguard Group, which runs funds that charge 40 cents, manages another 26 percent.

While the cheapest funds all track broad indexes of U.S. stocks weighted by market capitalization, SoFi’s offerings come with a twist. The SoFi 500 ETF, ticker SFY, and the SoFi Next 500 ETF, ticker SFYX, will be weighted using a proprietary mix of market cap and fundamental factors. SoFi provided “support in developing the methodology used by the index to determine the securities included,” the filing said.

The funds are free until at least March 27 2020, according to the filing, which lists the waived management fee as 0.19 percent.

Although the funds are branded by SoFi, the ETFs are being issued through a trust. Toroso Investments is the investment adviser responsible for the two funds, and has hired Exponential ETFs to run them day to day. Solactive AG created the benchmarks.

© Copyright 2024 Bloomberg News. All rights reserved.


InvestingAnalysis
The first free exchange-traded fund is on its way.Social Finance Inc., the online lender known as SoFi, is helping start two new ETFs that won't charge a management fee, according to regulatory filings. The funds, which plan to waive charges for at least the first year,...
no, fee, etf
326
2019-46-25
Monday, 25 February 2019 11:46 AM
Newsmax Media, Inc.

Sign up for Newsmax’s Daily Newsletter

Receive breaking news and original analysis - sent right to your inbox.

(Optional for Local News)
Privacy: We never share your email address.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
 
Get Newsmax Text Alerts
TOP

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved
NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved