ETF Watch: iShares Cuts Fees On 9 Funds

December 20, 2016

A recent filing from BlackRock’s iShares arm indicates that nine of the iShares ETFs are seeing their expense ratios cut down. The list includes two core ETFs, six multifactor ETFs and a short-term bond ETF.

The firm previously cut fees on 15 of its “Core” ETFs back in October, and this latest round of reductions seems to be part of an ongoing effort by iShares to remain competitive within the ETF industry.

“We regularly review our lineup of iShares ETFs to ensure we offer quality exposures at competitive prices to meet the needs of our clients,” the issuer said in a statement.

Cuts On Multifactor Products
Most notably, this round of fee cuts includes six of iShares’ multifactor ETFs, which have seen reductions ranging ­­­­­­from 15 to 20 basis points.

The $309 million iShares Edge MSCI Multifactor USA ETF’s (LRGF) expense ratio was trimmed from 0.35% to 0.20%, while the $25 million iShares Edge MSCI Multifactor USA Small-Cap ETF’s (SMLF)  expense ratio fell from 0.50% to 0.30%.

The $184 million iShares Edge MSCI Multifactor Intl ETF (INTF) saw its fee fall from 0.45% to 0.30%, and the fee of the $5 million  iShares Edge MSCI Multifactor Intl Small-Cap ETF (ISCF) was lowered to 0.40% from 0.60%.

The expense ratio for th $29 million iShares Edge MSCI Multifactor Emerging Markets ETF (EMGF) was lowered to 0.45% from 0.65%, while the expense ratio for the $5 million iShares Edge MSCI Multifactor Global ETF (ACWF) fell from 0.50% to 0.35%.

Core And More
iShares also cut fees on three other funds, two of which are part of the firm’s “Core” family of low-priced ETFs.

The expense ratios for the iShares Core Russell U.S. Growth ETF (IUSG) and the iShares Core Russell U.S. Value ETF (IUSV) have been reduced from 0.07% to just 0.05%. It should be noted that the two funds are set to be somewhat transformed as they will cease to track subindexes of the Russell 3000 on Jan. 23, 2017, and adopt subindexes of the S&P 900 ETF as their benchmarks. Essentially, the funds will no longer include small-cap stocks and will instead cover the large- and midcap segments of the U.S. market.

The ETF issuer also cut the fee on the iShares Ultra Short-Term Bond ETF (ICSH) by more than half, from 0.18% to just 0.08%. The fund, which launched in 2013, has just $25 million in assets under management, making it one of the smallest iShares ETFs, which likely explains the dramatic nature of the expense cut.

 

Nuveen Launches REIT ETF

Nuveen is launching its seventh ETF today. The NuShares Short-Term REIT ETF (NURE) targets real estate investment trusts (REITs) with shorter-than-average lease durations, such as companies operating apartment buildings, hotels and self-storage facilities, and those providing manufactured home properties, according to the prospectus.

“You find that historically those sectors of the REIT market have tended to outperform in a rising rate environment,” said Nuveen Managing Director and Head of ETFs Martin Kremenstein, noting that short-term contracts allow a business to reprice more frequently and react to a changing enviroment.

NURE is listed on the Bats exchange and comes with an expense ratio of 0.35%. Bats Global Markets owns ETF.com.

The fund is the first of its kind, with most of the REIT ETF space focused on the broad REIT market, although the iShares Residential Real Estate Capped ETF (REZ) has some $357 million in assets under management. Until NURE’s launch, REZ had really been the only U.S. REIT ETF to focus on any particular type of REIT.

Nuveen’s Kremenstein believes that the lack of more specific REIT funds is likely because real estate was only recently parsed out into its own sector in the Global Industry Classification Standard used by the index providers S&P Dow Jones Indices and MSCI

NURE tracks an index derived from the Dow Jones U.S. Select REIT Index, and as of the end of October, it had 36 components.

Kremenstein notes that Nuveen has two threads to its ETF plans: the environmental, social and governance space, where it recently launched five funds; and income products such as NURE and the NuShares Enhanced Yield U.S. Aggregate Bond ETF (NUAG), which it launched in September.

New MLP ETN Joins The Fray

Bank of Montreal listed today on the Nasdaq the BMO Elkhorn DWA MLP Select Index ETN (BMLP). The strategy tracks an index comprising 15 MLPs that are chosen based on the Dorsey Wright Relative Strength Ranking Methodology. The goal of BMLP is to own the top-performing MLPs—those showing the best relative strength compared with their peers. The portfolio is equal-weighted.

The fund comes with an 0.85% expense ratio.

BMLP will join at least several other MLP exchange-traded products on the market today, in a segment often considered one of the ETF market’s “most complex.” The biggest MLP ETN today is the J.P. Morgan Alerian MLP Index ETN (AMJ), with $3.6 billion in assets. 

Contact Heather Bell at [email protected].

 

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