3 Ways an Expanded ETF Deal Affects Investors Today: BlackRock, Inc.(BLK), Deutsche Bank AG (USA) (DB), State Street Corporation (STT)

2. Lower costs
The $2 trillion ETF market has grown leaps and bounds during its 20-year tenure. And as the market has grown, competition has heated up, driving fees down for investors. Because ETFs are based on indexes, that really cuts down on their cost structure. Studies have shown that minor improvements in fees can pay off substantially, leaving you more money in your account. So getting your hands on a high-quality, low cost ETF is really beneficial to helping you meet your financial goals.

Vying for a bigger slice of the ETF market, brokers are both revisiting the underlying index they track and ramping up their commission-free ETF offerings. And the big winner in all of this competition is you — the ETF investor. In fact, it’s now possible to invest in some first-class ETFs for practically nothing. Our Foolish Discount Broker Center can give you an even better idea of just how cheap it is.

3. Forcing action
One downside of the deal is that it creates some major headaches for Fidelity’s already-loyal ETF clients. The company is pressuring existing customers to replace some of the funds that are already in their portfolios. To make matters worse, some well-liked ETFs — including iShares MSCI EAFE Index Fund (ETF) (NYSEARCA:EFA) and iShares Russell 2000 Index (ETF) (NYSEARCA:IWM) –were booted from the commission-free program. Even though Fidelity is granting these clients a certain period of time to trade commission-free, selling ETFs that have appreciated in value will cause another headache for clients — this one in the form of a tax bite, courtesy of Uncle Sam.

Foolish bottom line
Despite the fact that Fidelity is annoying its existing ETF clients, by and large, the deal is good for the industry. It gives investors more choices, drives down costs, and is another example of how investors benefit from competition.

The article 3 Ways an Expanded ETF Deal Affects Investors Today originally appeared on Fool.com and is written by Nicole Seghetti.

Fool contributor Nicole Seghetti has no position in any stocks mentioned. Follow her on Twitter @NicoleSeghetti. The Motley Fool recommends BlackRock and TD Ameritrade.

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