Investors Come Out on Top in ETF Fee War
November 5th 2012 at 7:40am by Tom Lydon
After Vanguard and Charles Schwab aggressively cut expense ratios in the so-called exchange traded fund fee war, BlackRock’s iShares responded with low fees on its line of “core” funds. For the long-term investor, the price cuts will translate to a nice bundle of extra cash.
The new core series of ETFs from BlackRock includes:
- iShares Core MSCI Total International Stock ETF (NYSEArca: IXUS): 0.16% expense ratio.
- iShares Core MSCI EAFE ETF (NYSEArca: IEFA): 0.14% expense ratio.
- iShares Core MSCI Emerging Markets ETF (NYSEArca: IEMG): 0.18% expense ratio.
- iShares Core Short-Term Bond ETF (NYSEArca: ISTB): 0.12% expense ratio.
- iShares Core S&P Total U.S. Stock Market ETF (NYSEArca: ITOT): 0.07% expense ratio.
- iShares Core S&P 500 ETF (NYSEArca: IVV): 0.07% expense ratio.
- iShares Core S&P Mid-Cap ETF (NYSEArca: IJH): 0.15% expense ratio.
- iShares Core S&P Small-Cap ETF (NYSEArca: IJR): 0.16% expense ratio.
- iShares Core Total U.S. Bond Market ETF (NYSEArca: AGG): 0.08% expense ratio.
- iShares Core Long-Term U.S. Bond ETF (NYSEArca: ILTB): 0.12% expense ratio.
The ETFs provide cheap and broad exposure to the overall markets, writes Ron Rowland for TheStreet. [BlackRock Hits Back at Vanguard, Schwab with iShares ETF Fee Cuts]
Meanwhile, current shareholders of other ETFs may also change over to the cheaper options now available, but they should consider some factors, such as tax consequences and transaction costs, before making the switch. [Schwab ETF Fee Cuts to Save Investors $4 Million]
On the fund provider side, Rowland does not expect it is possible for indexed ETF firms to compete on just price. Consequently, other fund sponsors, such as State Street Global Advisors and PowerShares, among others, will need to focus on price challenge, marketing or become the go-to, alternative ETF providers. [BlackRock Lists Four ‘Core’ iShares ETFs]
Additionally, with expense ratios coming down to the 0.10% range, ETF providers will have to become more creative in keeping costs down. [What Vanguard’s Index Swap Means for ETF Investors]
For more information on the ETF industry, visit our current affairs category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.