SoFi is launching free ETFs

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US-based fintech SoFi has completed a regulatory filing for a series of exchange-traded funds (ETFs), some of which will come at no charge for investors, according to Bloomberg.

SoFi launched two index ETFs with no management fees, in addition to two others, which will charge an undisclosed fee; the new ETFs use indexes created by Solactive Insexres and Tidal Growth Consultants. SoFi initially focused on student loan refinancing, but it's been expanding its services: It moved into deposits in 2018 and recently launched SoFi Invest to offer both active and automated investing options at no fees.

Here's what this launch means for SoFi and the ETF industry:

The freemium space is heating up and incumbents should take a close look at the development. We've seen a number of fintechs launching investment services for free for a certain period or until a specific investment threshold. This will be particularly beneficial in helping to lure millennials who often can't afford to spend a lot of money on wealth management, but are expected to control as much as $20 trillion in assets globally by 2030, according to CB Insights.

As such, we expect that initial interest in SoFi's service will be high; however, the fintech might have to lower its price after March 2020 to compete with the lowest fees in the industry. And to prevent losing market share to fintechs like SoFi, incumbents should pay attention to how their freemium models pan out and roll out similar options if they're successful.

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