Quantcast
The MFWire
Manage Email Alerts | Sponsorships | About MFWire | Who We Are

Subscribe to MFWire.com's News Alerts [click]

Rating:E*Trade Supermarket to Offer Cash Back Not Rated 0.0 Email Routing List Email & Route  Print Print
Wednesday, July 16, 2003

E*Trade Supermarket to Offer Cash Back

by: Sean Hanna, Editor in Chief

Thanks to E*Trade some fund investors may soon be able to get a quick lesson on how revenue sharing works inside the fund industry. The online brokerage and bank said Wednesday that it plans to start crediting accountholders with half of the fees it receives from fund firms participating in its fund supermarket. Essentially, investors will be paid to hold their funds in an E*Trade account.

The plan is to rebate 50 percent of the 12b-1 and shareholder service agreement fees to customers on a semiannual basis by the end of 2003. E*Trade says it plans to pay the rebate to all customers regardless of their accounts' asset size. It will require shareholders to maintain account minimums and purchase requirements as established by individual fund companies.

The broker claims to be able to operate its fund supermarket on the reduced fees because of technological efficiencies that it has created.

E*Trade officials also hope that the ploy differentiates it from other fund supermarkets. "Our view is that this provides significant differentiation for us," Lou Klobuchar, E*Trade's chief brokerage officer, told Reuters. "We anticipate additional scale. As a result of that, we don't see it having any material impact on our bottom line when you take all of that into account."

E*Trade's decision to share the fees it collects from fund firms comes on the heels of Charles Schwab's decision to boost the revenues that it collects from funds. Throughout the first half of the year Schwab quietly told fund firms that it is increasing the fee it charges OneSource NTF partners to 40 basis points from 35 basis points in most cases.

Although E*Trade cited the 40 basis point figure in its illustration of the plan, it is unlikely that it charges any fund that amount. In most cases it likely charges fees in line with the industry standard 25 basis points. At that rate, shareholders could receive payments of 12.5 basis points, or $125 on a $100,000 account.

That amount is more than most E*Trade account holders are likely to see. The brokerage claims about 3.5 million customer accounts with combined assets of roughly $56 billion. It does not provide a breakdown of mutual fund assets, but simple division suggests that its average account holds just $16,000.  

Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE

0.0
 Do You Recommend This Story?



GO TO: MFWire
Return to Top
 News Archives
2022: Q3Q2Q1
2021: Q4Q3Q2Q1
2020: Q4Q3Q2Q1
2019: Q4Q3Q2Q1
2018: Q4Q3Q2Q1
2017: Q4Q3Q2Q1
2016: Q4Q3Q2Q1
2015: Q4Q3Q2Q1
2014: Q4Q3Q2Q1
2013: Q4Q3Q2Q1
2012: Q4Q3Q2Q1
2011: Q4Q3Q2Q1
2010: Q4Q3Q2Q1
2009: Q4Q3Q2Q1
2008: Q4Q3Q2Q1
2007: Q4Q3Q2Q1
2006: Q4Q3Q2Q1
2005: Q4Q3Q2Q1
2004: Q4Q3Q2Q1
2003: Q4Q3Q2Q1
2002: Q4Q3Q2Q1
 Subscribe via RSS:
Raw XML
Add to My Yahoo!
follow us in feedly




©All rights reserved to InvestmentWires, Inc. 1997-2022
14 Wall Street | 20th Floor | New York, NY 10005 | P: 212-331-8968 | F: 212-331-8998
Privacy Policy :: Terms of Use