I say that for a couple of reasons. For one, the Fidelity maneuver was sparked in the U.S. for two reasons.
First, Schwab laid down the gauntlet last year by rolling out its own series of ETFs and offering free trading for Schwab customers. This represented a serious threat to companies like BlackRock, which have dominant positions in the ETF space but do not have a brokerage platform to compete with Schwab. Schwab is a big, hairy competitor, and BlackRock did not want to let them gain traction. I’m guessing that Fidelity was in a strong negotiating position, and BlackRock was eager to make a deal.
The European market doesn’t have that same dynamic, since it’s the ETF issuers that are (for the most part) so commingled with the larger banks. There is no equivalent of Schwab breaking ground on the free trading front.
The second and larger reason, however, is that pushing into the retail space is the next big target for U.S. ETF issuers. It’s on the tip of the tongue of all the major ETF providers, and one of the first things they talk about when you discuss their goals for 2010 and beyond. They feel that they have done a good job educating advisers, and now they want to move into the broad-based retail market.
Retail investors are of course acutely affected by commissions, and the main target of these no-commission efforts. In Europe, the move into retail is still many years off: We still have to broaden out from institutions to professional investors and intermediaries before we can worry about retail.
I’d love to be proven wrong, but it seems to me that competing for eyeballs and product distribution at the institutional level remains the key focus, while lower-level retail distribution is a distant second or third.
And besides, at £1.50, European retail investors are getting a good shake anyway.