iShares Presents ETF Fees In A New Way

January 15, 2013

iShares looks to present the nuances of ETF prices on its website.


iShares, the world’s largest ETF provider, has revamped the way it goes about reporting expense ratios on its website for 42 ETFs in what appears to be an effort to provide investors with a more-up-to-date fee than the one that appears in each of the fund’s prospectuses.

The iShares MSCI Emerging Markets Index Fund (NYSEArca: EEM), which until Monday was listed on the company’s website as having an expense ratio of 0.67 percent, today shows two separate expense ratios: 0.69 percent and 0.66 percent. EEM is just one of at least 42 iShares funds now presenting expense ratios this way.

The asterisks attached to the reported figures explain that the first number reflects fees as of Aug. 31, 2012—the end of the funds’ fiscal years—while the second is a snapshot of what EEM cost on Dec. 31, 2012.  The difference reflects an increase in fund assets in the last four months of 2012 that pushed costs down for investors.

iShares’ move follows headlines it made on Dec. 31 after it submitted updated paperwork to regulators that included higher fees on 40 ETFs, including EEM. All those funds—save for one—are the focus of the change in reporting by iShares. The higher fees in the prospectuses reflected prices as of Aug. 31, 2012—the end of the fiscal year for the ETFs, and, as is the case for EEM, the lower fees as of Dec. 31 reflect asset gains.

Our reporting on that caused a bit of a stir at the time, and the takeaway is twofold: First it’s clear that  fund sponsors care a lot about how their prices are perceived by an increasingly demanding investing public; and secondly, there’s a lot more than meets the eye when it comes to understanding how much a given fund costs.

The move doesn’t appear to have been required by regulators and, as best we can tell right now, iShares seems to be the only fund sponsor that is taking this dual-disclosure approach to reporting expense ratios on ETFs.

The San Francisco-based iShares told IndexUniverse the changes, which seem to be centered on the funds detailed in the recent prospectuses, apply to as many as 105 out of the firm's 280 ETFs.


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