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The Future Price of Investing: Zilch

As money managers, brokers, and advisers fight for assets, costs keep dropping.
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Illustration: Patrik Mollwing

Could fees for investing ever fall all the way to zero? For investors in exchange-traded funds, that prospect is just three-hundredths of a percentage point away.

On Oct. 16, State Street Global Advisors slashed the cost of several funds, dropping the annual management fee of the SPDR Portfolio Total Stock Market andSPDR Portfolio Large Cap ETFs to 0.03 percent of assets per year. The funds join similar ETFs from BlackRock Inc. and Charles Schwab Corp. at that price. But it may not be the last move: ETF makers have been cutting costs wherever they can, most recently by creating their own market benchmarks to track so that they don’t have to pay licensing fees to index companies such as MSCI Inc. and S&P Global Inc. “My guess is that we’ll see the first mainstream 0.00 ETF in the next 18 months,” says Eric Balchunas, who analyzes ETFs for Bloomberg Intelligence.