Edgy for Boldest Newcomer Goes to Schwab

A year ago, DirexionShares received the Edgy Award for Boldest Newcomer of 2008 by entering the fray with 3x leverage. At the time, I thought the “boldest newcomer” category would have to be retired, thinking that no firm would be worthy of that title in the future.

Then along came Schwab. Not a newcomer to the brokerage arena, or even to fund management, Schwab decided to become an ETF sponsor in 2009. Schwab understood that it was late to the game, and it would need to make a grand entrance to avoid becoming roadkill on the ETF highway.

On November 3, 2009, Schwab joined the ETF arms race with a bang, with a game changer, with a watershed event. Schwab introduced a new line of ETFs with penny-pinching fee levels and commission-free trading for customers of Schwab’s brokerage services.

The Schwab announcement was historic. Just as no-load no-transaction fee mutual funds changed the mutual fund landscape, the arrival of commission-free ETFs will forever alter the way that ETFs are perceived. With this one change, nearly every argument in favor of traditional mutual funds over ETFs goes away. Granted, not everything is going to change overnight. Schwab’s ETF lineup is far from complete, not everyone has their account with Schwab, and full permeation of the 401k market is years away. Still, the ETF landscape has been forever altered.

For its ground breaking entry into the ETF world with commission-free trading and low fees, the 2009 Edgy Award for Boldest ETF Newcomer goes to Schwab.

Disclosure covering writer, editor, publisher, and affiliates: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.