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Discount brokers are fighting for your money, and they've pulled out all the stops to put their best feet forward. With several intriguing options that give you commission-free access to different ETF families, the broker you choose can have a big impact on the way you invest.

So far this week, we've taken a look at how both Vanguard and Fidelity have put together packages of commission-free ETFs for their customers. But it's important to remember that the first company to announce free ETFs was pioneering discounter Charles Schwab (NYSE: SCHW  ) . Unlike its competitors, Schwab had a couple of purposes in mind when it launched its cost-cutting initiative last November.

Starting fresh
When Schwab started the broker wars, it used the occasion to roll out a set of homegrown ETFs. Unlike Vanguard, it didn't already have an established famly of proprietary ETFs under its roof. But unlike Fidelity, Schwab decided not to rely on outside ETF providers to give its customers access to exchange-traded funds.

The move was a gamble. State Street (NYSE: STT  ) , BlackRock (NYSE: BLK  ) , and Vanguard are all much bigger players in the ETF industry, with billions of dollars under management already. Even with miniscule expense ratios, the ETFs bring in hundreds of millions of dollars of revenue annually for those companies. Starting from scratch put Schwab at a severe handicap. Although Schwab customers would get many benefits from commission-free ETF trading, Schwab couldn't be sure that its ETFs would catch on enough to be viable.

Where we stand
Six months later, the jury is still out. Schwab has eight ETFs, covering both domestic and international stock markets. From a fee standpoint, the ETFs are quite attractive, with expense ratios that match or beat most of the comparable funds that Schwab's competitors offer.

Schwab has made a reasonable start, but it still has a lot of work to do. Several of its funds are hovering in the $250 million range of assets under management, but some of its more specialized niche ETFs still haven't hit the $100 million mark. When you consider that fund expenses range from 0.08% to 0.35%, it's clear that none of the funds have become big profit centers for Schwab at this point.

Building a stock portfolio
The other problem for investors is that unlike Fidelity and Vanguard, Schwab's ETFs don't let you build a completely diversified portfolio. If you want to invest in asset classes other than stocks, such as bonds, you have to look elsewhere.

But if you want stocks, you can get a wide variety of them with Schwab's ETFs. Here's a sample of its offerings:

1. Schwab US Broad Market (NYSE: SCHB  )
One of Schwab's largest funds includes large- and small-cap domestic stocks. Tracking the Dow Jones Broad Market Index, the fund holds more than 1,500 stocks, ensuring that you'll cover all your bases. And at 0.08%, its expense ratio is one of the cheapest in the entire ETF industry.

2. Schwab International Small-Cap Equity (NYSE: SCHC  )
With just $43 million in assets, this fund isn't among Schwab's most popular ETF offerings. But it's one of the most unusual, since it focuses on small foreign companies that tend to be unavailable to U.S. investors. Its 0.35% expense ratio may look a lot higher than its domestic offerings, but with the added costs of investing abroad, it's actually a great bargain.

3. Schwab US Small-Cap (NYSE: SCHA  )
Unlike other fund families that track the Russell 2000 or S&P Smallcap indexes, Schwab's small-cap offering follows the Dow Jones Small-Cap Total Stock Index and owns around 1,750 stocks. Most investors won't notice any difference among the various indexes, and as for adding small-cap exposure, the Schwab ETF gets the job done as well as any of its competitors.

Schwab also has funds that large-cap growth and value funds, along with broad international and emerging markets ETFs.

Making the grade
Schwab clearly started this endeavor as an experiment, and now that its funds have hit the $1 billion mark overall, the company should strongly consider expanding its offerings. iShares and Vanguard have made it clear that they'll defend their dominance in the ETF industry, but Schwab's reputation for customer service could play in its favor in the ETF realm.

Unless Schwab offers bond and other asset-class ETFs, you won't be able to use Schwab as a one-stop shop for commission-free ETFs. In the brokerage wars, that could prove fatal.

Dan wraps up his look at broker offerings of ETFs tomorrow, with a look at other brokers and ETF providers, and what they'll likely do to answer their competitors' moves.

To find the best broker for your money, be sure to check out the Fool's Discount Broker Center.

Fool contributor Dan Caplinger has never talked to Chuck, but he opened a custodial account for his daughter there. That account holds shares of Schwab International Small-Cap Equity. Charles Schwab is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletter services free for 30 days. The Fool's disclosure policy didn't start the war, but it fights the good fight everyday.


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Dan Caplinger
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Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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