Exchange Traded Funds (ETFs)

Trading ETFs in a retirement plan or retirement plan model portfolio is just like trading mutual funds. 

Exchange Traded Funds (ETFs) frequently offer cost advantages over traditional mutual funds. With expense ratios that can be well below those of both actively managed and index mutual funds and transparent fee structures, it’s no wonder that there are over 2,300 ETFs listed in the United States with assets totaling over $3.67 trillion.*

The reasonable and transparent fees of ETFs also make them very appealing for retirement plans. However, most defined contribution systems have been designed around processing mutual funds that routinely trade on a dollar certain basis. The inability of most platforms to execute an ETF trade as a fractional share — as happens with dollar certain mutual fund transactions — has meant either absorbing additional brokerage costs, the expense of unitization, or the addition of new recordkeeping processes to handle whole share trading and its attending cash issues.

ETFxChange® allows Recordkeepers the ability to handle ETFs using the same systems and processes they already have in place for trading mutual funds.

  • ETFs trade like mutual funds within a retirement plan without additional operational burdens.
  • There are no commissions or other transaction fees, only a competitive asset-based fee for platform access.
  • The settlement process is identical to that of no-load mutual funds that participate in on the NSCC.
  • Clients have access to hundreds of ETFs from many leading providers.

Fees for Access to ETFxChange®

American Trust Custody charges the recordkeeper a competitive asset-based fee for access to the ETFxChange® platform. There are no transactional costs. American Trust Custody covers all commissions, SEC fees, and other trading and brokerage costs. From the plan sponsor’s perspective, the cost is the expense ratios of the ETF, plus the fee charged by the recordkeeper and the custodian.

Funds Available on ETFxChange®

American Trust Custody is proud to be a Preferred Network of BlackRock iShares as well as offer ETFs from other providers such as Invesco ETFs, WisdomTree ETFs, State Street Global Advisors SPDRs®, and Vanguard® ETFs.

American Trust Custody ETFxChange® Platform: Enabling Efficient ETF Trading in Retirement Plans.

American Trust Custody created ETFxChange® to facilitate ETF trading in retirement plans — providing participants access to this low-cost investment product directly in their plans. American Trust Custody can now support dollar certain transactions of its clients by buying and selling whole shares in the market and holding fractional shares as necessary. This efficiently eliminates a primary hurdle for recordkeepers wishing to support ETFs.

ETFxChange® is the first platform to allow record keepers the ability to handle ETFs using the same systems and processes they already have in place for trading mutual funds. In fact, with ETFxChange®, recordkeepers can trade ETFs alongside mutual funds in the same plans. Depending on the capabilities and offering of individual recordkeepers, advisors may also create participant model portfolios comprised of ETFs alone or in combination with mutual funds. ETF processing is integrated with the MATC mutual fund trading platform, allowing professionals an expanded investment lineup to the plans they service without increased operational burden.

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