Tone Deaf on ETFs
A couple of major announcements in the Exchange Traded Fund (ETF) world last week: State Street announced that they slashed the expense ratios on a ton of their ETFs and TD Ameritrade added a ton of ETFs to their ‘no-commission’ platform. At first glance, this is great news. Cheaper beta is available to more investors. However, this is actually tone-deaf and a transparent money grab. Hopefully, investors will show that they know better. Huh? State Street’s fee reductions are late in arriving. Vanguard and iShares have been eating State Street’s lunch for years, in large part due to lower expenses. Will investors flock to State Street now that it is the low-cost provider? Perhaps the dumb ones will. Investors who have money with Vanguard or iShares likely have huge gains. Selling these positions to save a couple of basis points would be penny wise and pound foolish. While it is…
