Fidelity and Charles Schwab are introducing transaction fees on select exchange-traded funds, marking a shift in how major brokerages charge for ETF trading.
Fidelity now charges what it calls "ETF service fees" on certain funds. These fees apply when you buy or sell specific ETFs through Fidelity's platform. The fees vary by fund and can range from a few dollars to more per trade. Charles Schwab has signaled it may implement similar charges in the coming months.
For decades, major brokerages eliminated commissions on most stock and ETF trades to compete for customers. This change represents a partial reversal of that trend, though it affects only a subset of ETFs rather than all trading.
The targeted funds typically fall into two categories. First, some ETFs carry fees because they're affiliated with rival firms or hold niche strategies. Second, certain international and specialty ETFs may trigger these charges. Fidelity and Schwab aren't charging fees on their own proprietary ETF lineups or most mainstream broad-market funds.
What matters for your portfolio depends on where you trade and which funds you own. If you use Fidelity or Schwab and regularly buy or sell the affected ETFs, these new fees will reduce your returns. A $10 fee on a $1,000 trade equals a 1 percent drag on that transaction alone. For active traders or those rebalancing frequently, the costs add up fast.
Passive investors with a buy-and-hold strategy face less impact. If you purchase a fund once and hold it for years, transaction fees barely matter. But if you're rotating between positions or dollar-cost averaging into particular ETFs, the math changes.
Check your brokerage website for the complete list of affected funds. Fidelity and Schwab both publish these lists clearly. If you