The price war among ETF providers is intensifying in a way that’s never been seen before. Online lender SoFi is planning to enter the asset management business with the first zero-fee ETFs.
The firm, which less than two weeks ago announced its entry into the brokerage business with no-fee trades, has filed with the SEC for four equity ETFs, including two that will waive fees for at least one year.
A day later, Vanguard announced it was cutting fees on 10 ETFs by one or two basis points.
The SoFi news is the bigger surprise, said Todd Rosenbluth, senior director of ETF and mutual fund research at CFRA. “SoFi is essentially crashing the ETF party that’s been around for 26 years and has grown to $3.7 trillion in assets.”
SoFi has filed for two no-fee ETFs — the SoFi 500 ETF (SFY) and the SoFi Next 500 ETF (SFYX), both based on Solactive indexes of mid-cap and large-cap stocks that focus on four growth-oriented fundamental factors, including sales growth and earnings-per-share growth.
It has not disclosed fees for the other two ETFs, so it’s likely they will not be free. Those ETFs are the SoFi 50 ETF (SFYF), another rules-based passive fund based on a Solactive Index, and the SoFi Gig Economy ETF (GIGE), an actively managed ETF.
Toroso Investments, which runs the $7 million TETF ETF — which invests in companies involved in the ETF industry — is the investment advisors for all four ETFs. CSaT Investment Advisory, doing business as Exponential ETFs, is the subadvisor for each.
“SoFi plans to waive the fee for the first year and we would presume it will be continually waived,” said Rosenbluth. “I think there will be more zero-fee ETFs.”