February 26, 2019 – The “race to the bottom” for a no-fee exchange traded fund is over, and the winner is a firm no experts had publicly predicted.

SoftBank-backed Social Finance filed on Monday to launch four ETFs, two of which have no management fees for at least the first year before the fee could increase. The other two ETFs do not yet have management fees listed. The ETFs’ specific launch date has not yet been determined.

ETF managers have been decreasing fees for years to appeal to investors who have been abandoning higher-cost mutual funds for the more tax-efficient and lower-fee products. In 2017, Columbia Threadneedle launched an ETF with no fee for three months, and in August, after years of declining fees in the asset management industry, Fidelity became the first company to offer no-fee mutual funds. That suite of products brought in $2.9 billion last year, Fidelity said in its annual report last week.

In late December, new Canadian ETF provider Accelerate Financial Technologies filed for a suite of ETFs that would not charge a management fee, and would only earn a fee if they outperformed a certain level.

Read more here.


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