FocusShares, the company acquired last year by Scottrade, has debuted 15 U.S. equity ETFs that are among the cheapest exchange-traded products available. The new products, which include both market cap-specific and sector-specific funds, are all linked to indexes developed and maintained by Morningstar. The new FocusShares ETFs include:
|Focus Morningstar US Market Index ETF||FMU||0.05%|
|Focus Morningstar Large Cap Index ETF||FLG||0.05%|
|Focus Morningstar Mid Cap Index ETF||FMM||0.12%|
|Focus Morningstar Small Cap Index ETF||FOS||0.12%|
|Focus Morningstar Basic Materials Index ETF||FBM||0.19%|
|Focus Morningstar Communication Services Index ETF||FCQ||0.19%|
|Focus Morningstar Consumer Cyclical Index ETF||FCL||0.19%|
|Focus Morningstar Consumer Defensive Index ETF||FCD||0.19%|
|Focus Morningstar Energy Index Index ETF||FEG||0.19%|
|Focus Morningstar Financial Services Index ETF||FFL||0.19%|
|Focus Morningstar Healthcare Index ETF||FHC||0.19%|
|Focus Morningstar Industrials Index ETF||FIL||0.19%|
|Focus Morningstar Real Estate Index ETF||FRL||0.12%|
|Focus Morningstar Technology Index ETF||FTQ||0.19%|
|Focus Morningstar Utilities Index ETF||FUI||0.19%|
At just five basis points, FMU, which offers broad-based exposure to U.S. equity markets, becomes the cheapest U.S.-listed ETF. That title had previously been shared by the Schwab U.S. Broad Market ETF (SCHB) and Vanguard S&P 500 ETF (VOO), both of which charge 0.06%. Each of the sector-specific FocusShares products will be the cheapest options in their ETFdb Category, in many cases ousting the popular Sector SPDRs from that spot. Products such as XLF and XLE charge expense ratios of 0.20%; the new FocusShares funds undercut that fee by a single basis point [see List of Cheapest ETFs].
“As a company committed to helping people make better investing decisions, these new ETFs are a logical extension of the products and services Scottrade has been providing for 30 years,” said Scottrade Founder and CEO Rodger Riney. “There is a growing demand for ETFs among individual and institutional investors as well as financial advisors, and we wanted to provide funds that we believe investors could find great value in that haven’t been available before.”
In addition to rock bottom expense ratios, the new products are being positioned as cost efficient in terms of commissions and fees as well. Online trading of all 15 FocusShares products is available commission-free to Scottrade brokerage customers and investment advisors using Scottrade Advisor Services as their custodian. FocusShares was acquired by Scottrade in 2010, and the launch of the suite of ETFs serves as the online brokerage’s response to similar initiatives introduced by TD Ameritrade, Fidelity, Charles, Schwab, and Vanguard. Schwab and Vanguard make their own lineups of ETFs available commission free to clients, while Fidelity partnered with iShares to offer commission free trading on 30 ETFs. TD Ameritrade’s free ETF trading platform includes more than 100 different tickers from a handful of different issuers [see Breaking Down Commission Free ETF Options].
FocusShares debuted its first ETFs in late 2009, rolling out hyper-targeted products that included a homebuilders fund, a Wal-Mart suppliers ETF, and a product focusing on alcohol, tobacco, and gambling known as the Sindex. A combination of a lukewarm reception from investors and the challenging economic environment forced FocusShares to close down in late 2008, and the company has been developing a plan to support a broader suite of ETF offering since then. FocusShares was acquired in late 2010 by Scottrade, and is now among the low cost providers of ETFs.
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Disclosure: No positions at time of writing.