Vanguard Group is declaring a price war in exchange traded funds (ETFs) against the biggest provider, Barclays Global Investors. Diya Gullapalli at The Wall Street Journal reports Vanguard is expected to launch an ETF designed specifically to undercut one of the biggest products on the market, which happens to be Barclays’. This move is part of a big effort to catch up in the ETF world. Because ETFs are touted for low costs, fees tend to be the critical feature in differentiating ETF products. The ETF under attack is the iShares MSCI EAFE (EFA) that tracks the MSCI EAFE Index. The Vanguard Europe Pacific ETF will track the same index but with an expense ratio of 0.15%. This compares to EFA at 0.35%. The iShares product has more than $45 billion in assets, and it is the second largest in the ETF industry, claiming 10% of U.S. ETF assets.
This is Vanguard’s latest effort in tripping the industry giant. Barclays makes up about 60% of the U.S. ETF market with more than 130 ETFs. Vanguard’s market share is about 7% with 32 ETFs. Earlier this year, Vanguard added bond ETFs to it’s lineup in an effort to up the ante; previously, Barclays was the sole provider of fixed income ETFs.
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