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rac98g
Follower ○○○

Will a major discount brokerage eliminate all transaction fees for all mutual funds in the future?

I am just thinking out loud.  I see the elimination of stock commissions as a "win" for individual investors.  However, it seems that discount brokerages have not gotten as competitive with regard to mutual fund commissions.  Yes, there are many NTF funds at places like Schwab, Etrade, and Fidelity.  However, these tend to be the more expensive mutual funds.  (Also, I know many of you probably avoid these fees altogether by just using ETF's or sticking with Vanguard or Fidelity Funds.)  If you purchase many of the lower cost funds that don't participate in revenue sharing with the brokerage, there are mutual fund commissions for buys and/or sells.  I would like to see one of the big discount brokerages--Schwab, Fidelity, or Etrade--make this move to eliminate commissions for transactions (if held for a reasonable time period--say 3 months).  For now, I think Etrade's $20 commission for a mutual fund such as Dodge and Cox, is one of the more competitive options.  Am I right about this, or do you feel there is a more competitive option out there for purchasing mutual funds that are not on an NTF platform? 

PS--I believe Firstrade may offer no commissions on mutual funds.  Does anyone use Firstrade, and how is their selection of mutual funds?  Thanks for sharing your thoughts.

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6 Replies
yogibearbull
Valued Contributor

Re: Will a major discount brokerage eliminate all transaction fees for all mutual funds in the futur

I doubt this as it is the last cash cow left. 

There are expenses to develop and maintain brokerage platforms and somebody has to pickup the tab. For now, it is the mutual fund TF traders. Of course there are thousands of MFs on NTF platforms [you pay if you sell too early], but funds split fees with NTF platform  [0.25-0.50%; from 12b-1 or administrative or management fees].

And MFs trade free on funds' own platforms.

Somebody may be first to be disruptive, but no one has done this so far.

YBB
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DocWu
Explorer ○○○

Re: Will a major discount brokerage eliminate all transaction fees for all mutual funds in the futur

Will non-discount Fidelity eliminate fees for Vangard funds? Nah, not while people like me are willing to do an occasional NTF fee  to grow our VG funds. It's gotta to be a big enough transfer that 70 bucks is a percent or two.  I still get a waiver at Schwab, and there I'll lob a few hundred bucks into a VG fund every month or two.

 

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archer
Participant ○○

Re: Will a major discount brokerage eliminate all transaction fees for all mutual funds in the futur

The other side of the NTF coin is the early redemption fee on load funds. I think there is only so much the brokerages can do with the funds they have to work with. I never understood how funds families were able to sell funds with 4-5% loads.

Capital
Contributor ○

Re: Will a major discount brokerage eliminate all transaction fees for all mutual funds in the futur


@DocWu wrote:

Will non-discount Fidelity eliminate fees for Vangard funds? Nah, not while people like me are willing to do an occasional NTF fee  to grow our VG funds. It's gotta to be a big enough transfer that 70 bucks is a percent or two.  I still get a waiver at Schwab, and there I'll lob a few hundred bucks into a VG fund every month or two.

 


I'm at Fidelity and the back door is to buy the Vanguard ETFs at no commission.

Capital
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ElLobo
Participant ○○○

Re: Will a major discount brokerage eliminate all transaction fees for all mutual funds in the futur

Does anyone see any reason why OEFs will continue to exist, given the rise of ETFs?  Why have an account, at Vanguard, to buy VFINX whenever SPY is available everywhere, and so is VOO?

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archer
Participant ○○

Re: Will a major discount brokerage eliminate all transaction fees for all mutual funds in the futur

I have not been able to find ETFs to match my actively managed OEFs in as favorable combinations of growth, SD, and Sharpe. I have also found the screeners to be more cumbersome. Sometimes they get it close, eg FTEC for FBSOX, and FCOR for FCBFX. Maybe I'm just not good at finding them. How about an ETF dup of EAALX, or VLAAX, or AKREX,,,PIMIX,,,,IOFIX,,,FSMEX. 

I prefer ETFs if they can show me the money.

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