Brokerage Giants Expand In ETF Space

After adding $19 billion last month, exchange-traded products trading in the United States, including ETFs and exchange-traded notes (ETNs) have hauled in $145 billion in new assets through the first nine months of this year – a record for that time frame, according to ETFGI, a London-based ETF research firm.

That suggest while the U.S. ETF industry remains dominated by the “big three” – iShares, Vanguard and State Street – there is still room for able competitors. That secondary group includes brokerage giants Charles Schwab Corp SCHW and privately held Fidelity. California-based Schwab and Boston-based Fidelity, though both late entrants to the ETF business, are now the seventh- and 22nd-largest U.S. ETF issuers, respectively.

“While Schwab's decision six years ago to add a broad array of low-cost ETFs has helped make it the seventh largest ETF provider at the end of September with $34 billion in assets according to etf.com, just ahead of Guggenheim, discount brokerage peer Fidelity was just outside the top-20 with $2.8 billion in assets,” said S&P Capital IQ in a new research note.

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Players In The Sector: Fidelity

Until late 2013, the Fidelity NASDAQ Comp. Index Trk Stk(ETF) ONEQ, a NASDAQ Composite tracking ETF, was Fidelity's lone ETF.

That year, the mutual fund giant launched a lineup of 10 sector funds, including the Fidelity MSCI Health Care Index ETF FHLC and the Fidelity MSCI Information Technology Index ETF FTEC.

The firm followed those launches up with the debuts of several actively managed bond funds and earlier this year, the Fidelity MSCI Real Estate Index ETF FREL debuted.

FHLC is the largest Fidelity ETF.

Players In The Sector: Schwab

At the end of the third quarter, ETF assets custodied at Schwab climbed 10 percent on a year-over-year basis to $237 billion, according to Schwab Third-Quarter Snapshot. Bond funds have been prolific asset gatherers this year, with fixed income ETFs listed around the world now home to a combined $500 billion in assets under management.

Schwab is getting a piece of that action, as more than half of the company's third-quarter ETF inflows went into bond funds, with a third going into U.S. equity products, according to Schwab data.

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Now And Looking Forward

“Fidelity has more than $162 billion in ETF assets under administration and provides its brokerage customers access to many ETFs, including 70 iShares, that they can buy commission-free online,” according to S&P Capital IQ.

With new additions to the Schwab ETF OneSource commission-free ETF platform, “investors can now buy and sell 214 ETFs covering 66 Morningstar Categories with $0 online commissions, no enrollment requirements and no early redemption fees – key differentiators for investors comparing Schwab ETF OneSource to other commission-free ETF offerings,” said Schwab in a statement.