Our costs are down, but prices are down too...
A typical ETF charges 0.1% a year, compared with perhaps 1% for an active fund.
You can buy ETFs on your phone.
An ongoing price war means the cost of trading has collapsed, and markets are usually more liquid than ever before.
Especially when the returns on most investments are as low as today’s, it all adds up.
what a dilemma. fido does not accept payment for order flow like the others who have gone to zero. at least at zero they can still make a small amount on the PFOF.
fido price improvement is real and superior to the rest, but the public doesn't get it. all they care about is free.
Fido took a shot at the competition with the increase in core MM interest, which was a huge plus for the customer, while the others still pay peanuts. but all the short-sighted public cares about is free trades.
Fido service (even schwab / TD / ET) is solid. with the new kid Robinhood you can't even speak to anyone. tough to maintain the same service level while charging zero.
better staff up the outgoing ACAT department, it's about to get very busy.
How can technology match all that? Active Trader Pro breaks down and cry every so often. The website, if anyone can login, is falling apart, and the app is constantly behind, trying to catch up, with no real vision behind it. Active Trader Pro could not exist without traders and tech people supporting it, and the developers count on it with their bugs. Love Trump and NRA, but even they couldn’t clear this swamp.
If Fidelity drops on line trading commissions to zero like all its competitors just did they would have to cut about 4000 jobs or take the bottom line hit. Or not drop commissions and be non competitive. Gonna get even uglier if stock market continues to roll over.
Think about this - funds run by computers that follow rules set by humans account for 35% of USA stock market, 60% of institutional equity assets and just about 60% of the overall trading activity.