BlackRock Slashes Fees, ETF Price War Intensifies

iShares Core Russell U.S. Value ETF (IUSV - Free Report) - from 0.07% to 0.05%

Bond ETF

iShares Ultra Short-Term Bond ETF (ICSH - Free Report) - from 0.18% to 0.08%.

Competition

The move by BlackRock brings its multifactor ETFs with new lower expense ratio in close competition with low-cost Goldman Sachs Group Inc. multifactor products. The issuer is looking to attract individual and institutional investors who seek to pay lower expenses for actively managed funds.

The launch of multifactor ETFs has been most popular strategy this year. As per data compiled by Bloomberg, multifactor ETFs have been dominant among other launches. Even Wells Fargo plans to enter the ETF market with a multifactor ETF next year. As per Morningstar Inc., there are a total of 204 multifactor ETFs with approximately $39 billion assets under management.  

Competition in the ETF market is cut throat. So the expense ratio war is likely to continue in the near term. Several asset managers are ready to further reduce fees to attract investors’ fund and gain market share.

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