iShares The Love

January 03, 2007

iShares lowers fees on many of its international ETFs, but not, curiously, on emerging markets.

Barclays Global Investors (BGI) is lowering fees on many of its international exchange-traded funds (ETFs), according to a new prospectus filed at the Securities and Exchange Commission (SEC) before the 1st. The new prospectus deals exclusively with the MSCI-linked international funds.

BGI spokeswoman Christine Hudacko said that as asset counts rose on the funds, Barclays was able to pass down economy-of-scale savings to shareholders. The truth is closer to "has to" - Barclays' management agreement for many of itsfunds calls for a direct relationship between fees and assets levels, with fees falling as different fund families reach new milestone asset counts. Still, a fee reduction is a fee reduction, and Barclays should be congratulated for doing the right thing for shareholders.

Curiously, the fee on the hugely popular iShares MSCI Emerging Markets Fund (NYSE: EEM) remains stuck at 75 basis points.  That fund is not bound by the asset-linked fee reductions that impacts the other products, so despite posting some of the highest asset growth of any fund on the market in 2006, the 75 basis point expense ratio (ER) is staying right where it is.

Many thought that BGI would reduce the fee on EEM after Vanguard altered its MSCI Emerging Markets ETF (AMEX: VWO) to be essentially identical to the fast-growing BGI product.  VWO charges just 30 basis points for the same exposure.

Outside of EEM and the even more popular iShares MSCI EAFE ETF (NYSE: EFA), most of the MSCI-linked funds are dropping their official fee by four basis points. Billions of dollars in assets time four basis points equals … a lot of money.

The new and old published fees are:

Fund

 Ticker  

 New ER

 Old ER 

Australia

EWA

54

59

Austria

EWO

54

59

Belgium

EWK

54

59

Brazil

EWZ

70

74

Canada

EWC

54

59

EMU

EZU

54

59

France

EWQ

54

59

Germany

EWG

54

59

Hong Kong

EWH

54

59

Italy

EWI

54

59

Japan

EWJ

54

59

Malaysia

EWM

54

59

Mexico

EWW

54

59

The Netherlands

EWN

54

59

Singapore

EWS

54

59

South Africa

EZA

70

74

South Korea

EWY

70

74

Spain

EWP

54

59

Sweden

EWD

54

59

Switzerland

EWL

54

59

Taiwan

EWT

70

74

UK

EWU

54

59

 

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