ETF Watch: BlackRock Cuts Fees

October 05, 2016

Today BlackRock's iShares unit announced that it would be lowering the fees on 15 of its iShares "Core" ETFs, effective immediately. The cuts range from 2 to 5 basis points on each fund.

The No. 1 ETF provider in the U.S. is staving off competition from firms offering similar products at rock-bottom prices, such as Vanguard and Schwab. However, the move by BlackRock also seems to take an aggressive swipe at State Street Global Advisors.

The nearly $200 billion SPDR S&P 500 ETF (SPY) costs 0.09%, but iShares is slashing the fee on the competing iShares Core S&P 500 ETF (IVV) to undercut SPY even more. IVV used to cost 0.07%, but its price has been lowered to just 0.04%. Even the Vanguard 500 ETF (VOO) costs more at 0.05%.

This isn't the first time BlackRock has been aggressive with matching or undercutting fees on competing ETFs in its Core family, which is aimed at advisors. In November of last year, BlackRock trimmed the cost of the iShares Core S&P Total Stock Market ETF (ITOT) to just 0.03%, undercutting the Schwab U.S. Broad Market ETF (SCHB), which cost 0.04% at the time. Of course, with ETF issuers in a race to the bottom on fees, it's no surprise that SCHB now costs 0.03% as well.

The full list of fee reductions in this latest round of cost cutting is below:

ETF Ticker New ER (%) Reduction (bps)
iShares Core S&P 500 ETF IVV 0.04 3
iShares Core S&P Mid-Cap ETF IJH 0.07 5
iShares Core S&P Small-Cap ETF IJR 0.07 5
iShares Core High Dividend ETF HDV 0.08 4
iShares Core Dividend Growth ETF DGRO 0.08 4
iShares Core MSCI Total International Stock ETF IXUS 0.11 3
iShares Core MSCI EAFE ETF IEFA 0.08 4
iShares Core MSCI Europe ETF IEUR 0.10 2
iShares Core Pacific ETF IPAC 0.10 2
iShares Core Emerging Markets ETF IEMG 0.14 2
iShares Core Total USD Bond MarketETF IUSB 0.08 4
iShares Core U.S. Aggregate Bond ETF AGG 0.05 3
iShares Core 1-5 year USD Bond ETF ISTB 0.08 4
iShares Core 10+ Year USD Bond ETF ILTB 0.08 4
iShares Core International Aggregate Bond ETF IAGG 0.11 4

 

Franklin Templeton Rolls Out Active Bond ETF
Today Franklin Templeton has added another ETF to its lineup with the launch of the actively managed Franklin Liberty Investment Grade Corporate ETF (FLCO) on the NYSE Arca. The new fund comes with an expense ratio of 0.40% and offers exposure to the USD-denominated, investment-grade corporate debt segment. FLCO has no target maturity or duration.

PowerShares Plans High Div, Low Vol Complement

Invesco PowerShares has filed for a small-cap version of its $2.7 billion PowerShares S&P 500 High Dividend Low Volatility Portfolio (SPHD). The proposed fund, the PowerShares S&P SmallCap High Dividend Low Volatility Portfolio, will list on the Bats Global Markets exchange, which owns ETF.com.

The fund selects its components from the S&P SmallCap 600. The underlying index includes 60 securities in all. First, the broad small-cap U.S. index is screened to select the 90 equities with the highest dividend yields. The 60 equities with the lowest volatility are selected from that pool to arrive at the underlying index.

SPHD's index follows a similar methodology. However, it only includes 50 equities selected from the S&P 500.

The filing did not include a ticker or expense ratio.           

Contact Heather Bell at [email protected].

 

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