Global X, the New York-based ETF firm known for its niche strategies focused on commodities and the emerging markets, cut the expense ratio on its Global X SuperDividend ETF (NYSEArca: SDIV) by almost half as a consequence of getting rid of business development companies in the fund holdings.
The index provider's jettisoning of so-called BDCs meant Global X was able to stop paying acquired fund fees associated with BDCs, according to a company official. The fund’s expense ratio is now down to the management fee of 0.58 percent from 1.14 percent prior. The acquired fund fees amounted to 56 basis points.
The fee cut puts SDIV very much in the middle of the pack in terms of dividend ETF expense ratios, many of which cost around 0.60 percent. Payout ETFs have been all the rage in the past two years, attracting investors who are worn out by all the market volatility of the past few years and are keen on getting a bit of a cushion in the form of reliable dividends.
Interestingly, Global X’s SDIV launched in June 2011 with an annual expense ratio of 0.79 percent—a figure that reflected the same 0.58 percent management fee plus initial estimates of the acquired fund fees.
“When we launched the fund, the acquired fund fees from the BDCs were estimations, and after the accounting period, they went up,” the Global X official told IndexUniverse in an email exchange, explaining how the expense ratio jumped to 1.14 percent. “The Global X management fee was always at 58 basis points,” the official said.
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