1) TD Ameritrade to Offer Largest Commission-Free ETF Program with Expanded 296 ETF Lineup TD Ameritrade |10/16/2017
Because… TD Ameritrade’s overhaul of its commission-free ETF program is long overdue. TD offered the largest selection of no-transaction-free ETFs when it waived trading fees on 101 ETFs seven years ago, but Schwab and E*Trade have expanded their lineups over the years and surpassed TD in terms of the number of commission-free ETFs. Besides increasing the number of offerings, TD added First Trust, ProShares, JP Morgan, and AGFiQ QuantShares, and removed funds from Vanguard, Van Eck, PIMCO, and Barclays. It also tweaked fund choices from the other four sponsors that have remained on the platform. Ultimately, it is the quality of ETFs, breadth of market coverage, ease of fund selection, and availability of educational resources that will drive the platform growth.
2) State Street Global Advisors Launches Suite of Ultra-Low-Cost SPDR Portfolio ETFs State Street Global Advisors | 10/16/2017
Because… SSgA, the sponsor of the industry’s first ETF, has gradually ceded market share to providers that offer lower-cost ETFs. Significant flows into iShares’ Core series, Vanguard, and Schwab indicate that the low-cost strategy is very effective in generating sales in the ETF space. SSgA’s price cuts range from four basis points for three bond ETFs to 48 basis points for an emerging markets ETF, pushing the already fierce price war to a new low. SSgA also replaced three Russell indexes with proprietary indexes. Earlier this month, Schwab introduced a self-index ETF. BlackRock also rolled out two self-indexed bond ETFs in July. We expect more ETF providers to create their own indexes to bring down costs.
3) First Eagle Investment Management Agrees to Acquire NewStar Financial First Eagle | 10/17/2017
Because… The acquisition is another example of business diversification by investment boutiques amid increased competition. First Eagle rebounded to positive sales of $1.8 billion this year through September after experiencing net redemptions of $618 million in 2016, thanks to flows into two global/international funds. The firm offers seven funds. With the Overseas Fund soft-close since May 2014 and the Fund of America partially closed since September 2005, its ability to gather new assets is somewhat weakened. Its only bond offering, High Yield Fund, suffered net outflows in both 2016 and this year. NewStar’s expertise on middle market loans and liquid credit strategies may help First Eagle gain some footing in the fixed-income space.