Raymond James Financial, Inc. (RJF) yesterday announced its intention to offer exchange traded funds (ETFs) without charging any transaction fees in an attempt to make its services at par with the other established players in the ETF space. The company will begin by making around 120 commission-free ETFs available to its affiliated registered investment advisers (RIAs) and their clients next month.
The first round of fund offering, which is expected to start from Nov 1, 2014, will consist of ETFs provided by First Trust, AdvisorShares, ALPS Advisors and Greenhaven. These specific funds were chosen by Raymond James on the basis of their portfolio hedge effectiveness.
Some other RIA custodians – The Charles Schwab Corporation (SCHW), TD Ameritrade Holding Corporation (AMTD) and E*TRADE Financial Corporation (ETFC) – already offer such no-fees ETFs. Hence, Raymond James felt it necessary to do the same in order to propel growth of its RIA unit. This division includes around 110 RIA firms and over $10 billion in assets.
However, unlike these companies, Raymond James plans to focus more on the actively managed ETFs instead of the passively managed ETFs that largely constitute the broader ETF market.
The company is expected to benefit from this step, given the increasing contribution of the RIA channel in the growth of ETF market. While the RIAs use ETFs as a tool for attaining cost-effective exposure in diverse asset classes, ETF providers benefit from the extension of their client base.
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