BlackRock, State Street and Vanguard are the three largest ETF providers and together control about 80% of the assets in the business. State Street and Vanguard have announced fee reductions on some ETFs in 2012.
“Price can be an important differentiator, especially for attracting new money and some sponsors are lowering expense ratios to be competitive,” Ogden Hammond, a McKinsey consultant, said in a Financial Times report. “It’s natural for a maturing industry to become more competitive and for margins in some segments to be squeezed.” [ETF Price Wars: Round 2]
In related news, Global X Super Dividend ETF (NYSEArca: SDIV) lowered its expense ratio to 0.58% from 1.14% this week. [Global Dividend ETF Cuts Fee]
“As an increasing number of investors use ETFs for longer periods of time, they are doing more due diligence on the total cost of ownership, on how this product fits into my asset allocation, on benchmark analysis and how the product is tracking the benchmark,” said Deborah Fuhr, partner and co-founder of ETFGI, in the Ignites report. “Users are now comparing [ETFs] not just against each other, but against other products.”