iShares Slashes ‘Core’ ETF Fees

November 10, 2015

BlackRock cut fees on seven of its “iShares Core” exchange-traded funds today, as the price war between providers to offer the lowest-cost plain-vanilla ETFs continued.

The most noteworthy fee reduction came on the iShares Core S&P Total Stock Market ETF (ITOT | A-100), which saw its fee cut more than half, from 0.07 percent to 0.03 percent per year. The move makes ITOT the cheapest equity ETF in the U.S., undercutting both the Schwab U.S. Broad Market (SCHB | A-100) at 0.04 percent and the Vanguard Total Stock Market (VTI | A-100) at 0.05 percent.

Index Change As Well

Of note, iShares also switched the benchmark for ITOT, changing from the S&P Composite 1500 Index to the much broader S&P Total Market Index. The new index adds more than 2,000 small- and micro-cap stocks to the fund’s bogey.

“iShares is throwing down the gauntlet here, putting Schwab and Vanguard on notice that it won’t be undersold,” said Matt Hougan, CEO of ETF.com. “There’s an element of showmanship in undercutting Schwab by 0.01 percent on ITOT, but still, it’s great for investors. More important, perhaps, is broadening the index. ITOT’s now a legit competitor to VTI and SCHB.”

Beyond ITOT, BlackRock cut fees on six other funds. The complete list is shown below:


Category Fund Ticker Previous
Expense
Ratio (%)
New
Expense
Ratio (%)
U.S. Equity iShares Core S&P Total U.S. Stock Market ITOT 0.07 0.03
iShares Core U.S. Growth IUSG 0.09 0.07
iShares Core U.S. Value IUSV 0.09 0.07
International Equity iShares Core MSCI Emerging Markets IEMG 0.18 0.16
iShares Core MSCI Europe IEUR 0.14 0.12
iShares Core MSCI Pacific IPAC 0.14 0.12
Fixed Income iShares Core Total USD Bond Market IUSB 0.15 0.12

In addition, the firm announced it add a new fund—the iShares Core International Bond ETF (IAGG)—to the Core group when it launches on Thursday, while booting the iShares Core GNMA Bond ETF (GNMA | B-88) from the list.

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