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March 13, 2013 at 09:06 AM
Fidelity Investments and BlackRock are hopping on the commission-free ETF bandwagon in a big way.
The two firms announced Wednesday that they were joining in a long-term strategic alliance that provides “extensive collaboration” between Fidelity’s distribution and asset management organizations and BlackRock’s leading exchange-traded fund (ETF) provider, iShares.
Under the new deal, Fidelity will more than double its online commission-free ETF offerings and create ETF portfolio strategies using iShares as components within its managed account offering, Portfolio Advisory Services. PAS offers professional money management and access to proprietary research through model portfolios of mutual funds and personalized portfolios using mutual funds, ETFs and separate accounts. Customer investments have increased in Fidelity managed accounts products by 73% in the past three years.
The partnership is expected to increase and improve millions of customers’ access to a broad selection of passive ETFs provided by iShares, the world’s largest ETF manufacturer. Fidelity is increasing the number of iShares ETFs that can be traded commission-free on Fidelity.com to 65 from 30. The new list includes all 10 iShares Core ETFs plus international, domestic and specialized equity, fixed income and commodities ETFs.
“Through this groundbreaking alliance between two financial services leaders, we will leverage our complementary strengths to deliver leading ETF products and research that are unmatched to more than 10 million Fidelity customers,” said Kathleen Murphy, president of personal investing at Fidelity Investments, in a statement.
Fidelity and BlackRock’s move adds to a recent phenomenon in the ETF space. Buying and selling funds without paying any brokerage commissions is one of the biggest ETF trends going on right now, according to Ron DeLegge, editor of ETFguide. The trend was given a huge boost in February when Charles Schwab made the game-changing announcement that it would offer commission-free access to 105 ETFs from six big ETF providers. BlackRock’s iShares is not one of the six.
“Not only is [the trend] drastically reducing the cost of ETF investing, but it’s directly influencing ETF asset flows,” wrote DeLegge in a comment for AdvisorOne that lists Charles Schwab, Fidelity, TD Ameritrade and Vanguard as the top four commission-free ETF platforms.
