The ETF fee war is expanding. Charles Schwab [profile] has filed today to drop its management fees for seven ETFs by between 2 and 10 basis points each. [SEC filing.]

The funds are seven U.S. equity index ETFs that have a combined $4.46 billion in assets, led by the $1.13 billion Schwab U.S. Broad Market ETF.

"The last time I checked, low fees on indexed products were pretty great for investors," Schwab president Walt Bettinger told reporters on a conference call. "If our founder Chuck Schwab was on this call, he might say he had a hand in lowering fees for investors almost 40 years ago."

The seven funds' current and reduced management fees are as follows:

Schwab U.S. Broad Market ETF from 6 to 4 bps;

Schwab U.S. Large-Cap ETF from 8 to 4 bps;

Schwab U.S. Large-Cap Growth ETF from 13 to 7 bps;

Schwab U.S. Large-Cap Value ETF from 13 to 7 bps;

Schwab U.S. Mid-Cap ETF from 13 to 7 bps;

Schwab U.S. Small-Cap ETF from 13 to 10 bps;

Schwab U.S. Dividend Equity ETF from 17 to 7 bps.

Bettinger stressed that this move "is not a temporary marketing strategy." He said that the price cut was approved by Schwab's board this summer.

Bettinger affirmed that Schwab's ETFs are profitable for the shop, but said that asking whether the company makes money on its ETFs is "like asking Apple whether it makes money on the glass screen of the iPhone. They're worried about making money on the whole thing." 

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