Is Market Vectors’ price cut on HAP an early sign of a possible price war?
Van Eck Global this week cut the cost of its Market Vectors RVE Hard Assets Producers ETF (NYSEArca: HAP) by almost 17 percent, a move that comes at a time of increasing competition in equities-based commodities funds.
HAP will now have a net expense ratio of 0.49 percent compared with 0.59 percent previously, the company said in a press release. That price reflects a heftier fee waiver that will be in effect until May 1, 2013. Without any fee waiver, the fund would cost investors 0.63 percent a year, Van Eck said.
"We expect the reduced pricing will make HAP a more attractive option for long-term investors seeking comprehensive exposure to the world's largest and most prominent hard assets producers and distributors," Jan van Eck, president of the Market Vectors ETF Trust, said in the press release.
The fee cut comes at a time when new low-cost equities-based commodity funds are coming onto the market. Earlier this month, iShares launched five equity commodity funds with expense ratios of 0.39 percent. Two of those funds also came with fee waivers.
Other pre-existing equities-based commodities funds are even cheaper. Both the Focus Morningstar Basic Materials ETF (NYSEArca: FBM) and the Vanguard Materials ETF (NYSEArca: VAW) have annual expense ratios of 0.19 percent.
HAP is a creation of Van Eck and commodities investor Jim Rogers. When it launched in September 2008, HAP was marketed as the first global pure-play hard assets ETF. HAP had $188.3 million in assets as of Feb. 29, according to data compiled by IndexUniverse.
HAP is one of 12 hard-assets ETFs in the Market Vectors family, which includes funds focused on specific segments in the hard assets markets such as agriculture, coal, gold and oil.
Van Eck Global is known in the money management industry for its commodities-related investment strategies.