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Are Free ETFs the Best Bet for Investors?

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    Charles Schwab ETF Platform Management V.P. Beth Flynn on investing in ETFs.

  • Duration 4:32
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Trading ET absent -- up for free is a growing trend but are they really cheaper we spoke with MarketWatch.

-- economist Chuck Jaffe who warned investors.

There's no such thing as a free lunch when it comes to ETF trades.

We still know where the costs are going to be and it's not necessarily the funds you want.

And I think the other thing is the funds that are in there are very thinly traded and -- an ETF based thinly traded you may get the free trade.

But -- execution.

The price you're buying may not be such a great price.

Anorexic fusion is bad that's where you have a cost that you can't even figure out.

Right so does that hold true for Charles Schwab and its new trading platform called one source joining me now that plan.

She's -- vice president Charles Schwab ETF platform management.

Now I have to tell you that I've been -- -- at these things for a long time and they are cheaper and that's why people are turning to them you recently initiated that study at Schwab.

Inside the mind the DTF investors went to find.

Penetrate we found two things primarily first of all investors love ETFs.

They tell us that more than 41%.

Are going to invest more heavily ETFs in the coming here.

And that tells the cost matters and there's a couple of -- with a price talk about more.

-- expense ratios the most important.

But commissions follows hot on its heels and that's why we think the launch of ETF one source with the most commission free Jeffs is going to be great for investors.

Well this is the the big change for investors because these ET apps what you pay for them typically so much lower than regular old fashioned mutual funds.

Now when I had -- -- not too long ago though he took issue with you guys.

Because the university.

TFs in this platform you offer -- It gets a 105 of 970.

ETFs with no commissions.

He said there may be ETFs out there that you why.

Better not on this platform how do you respond.

Right people like chuck Schwab Chuck Jaffe is a great advocate for investors which we love.

But he misses the point on this -- the point of the program is to develop a comprehensive.

Range of a 105 ETFs with coverage in nearly every Morningstar category -- have every single media available.

Commission for you can buy all of those at Schwab but a subset for now.

Is commission free we're delighted with the lineup of a 105.

From six leading ETF providers in our clients have choice among -- asset categories.

And we think that's a great start.

But what about the fact that some of the most popular ETFs -- on this thing like the SP 500 chat trust the spdr S&P 500 trust the spdr S&P mid cap.

IShares S&P mid cap.

He'll look at some of these and you wonder why -- -- part.

Of your trading platform why not.

Right well the program's not for everyone and our goal was to have coverage in all the major -- categories.

Schwab has terrific product in some of the main asset categories.

Though we -- of the swap product are the lowest in the industry.

As they said that our initial launches a 105 we hope that that's gonna grow we would love for other providers to -- answer your -- Yeah -- -- -- also we've gotten since launch bodes well yeah.

Let's talk just for a second that that want to get back to ETFs and their -- because -- a lot of people they know the fees are low.

But they may have missed the fact that these things trade like stocks so -- like a mutual fund -- may be hard to get out of that thing if you really want to dump -- Quickly these ETFs you can tell right away.

Yep that's right that's one of the appeals of exchange traded funds we've seen our active trader client base using -- more frequently in lieu of individual securities.

But along without also -- -- education -- around how to best trade them.

How to get best execution.

I think a lot of people are doing this kind of investing now not just on your platform -- and other places as well where there.

They're making these choices they're getting all the diversification that they want -- -- paying so little for it.

And I wants -- study that showed that.

It's not really the -- -- she used it's that feeds you pay that it the end of the day and make the big difference.

Yeah I mean for the small investor.

That these matter so let's take an investor.

You know who's been trading a hundred shares that you know nine dollar commission really eats into that and it makes -- -- -- -- to reinvest and dollar cost average.

In a in a cost effective way so we think that eliminating commissions especially for the smaller investor.

Is going to be a real -- let them keep more -- their investing dollars bet thanks for coming on tonight appreciate your time.

Thanks for having me.

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