Vident to Pare Fees on Popular International ETF

The Vident International Equity Fund (NasdaqGM: VIDI) is celebrating its first anniversary in style as the Atlanta-based issuer behind the fund said Thursday it will lower VIDI’s expense ratio by seven basis points to 0.68%.

VIDI’s new annual expense ratio will go into effect on March 1, 2015, according to a statement released by Vident today. This decrease to the overall management fee actually ends up being a 14% decrease to the fees Vident receives for its services as the fund’s index provider, according to Vident.

VIDI tracks the Vident Intenational Equity Index (VIE), which evaluates constituent countries “across growth, sound money, political stability and value factors.  VIE rebalances twice a year and “seeks to reduce country, currency, and company concentration risks that can sometimes be typical amongst traditional capitalization-weighted approaches,” according to the issuer. [Vident Global Equity ETF Debuts]

The ETF was one of the most successful new ETFs to come to market last year, racing to $500 million in assets under management in just 12 weeks. As of Oct. 29, VIDI had over $715 million in AUM.

VIDI’s nearly 500 holdings are selected from 35 developed and emerging markets with an emphasis on quality traits such as robust GDP growth, high productivity ratios and low debt-to-GDP ratios.

The ETF allocates no more than 4.86% of its weight to any country. Japan, Malaysia, Taiwan and Hong each have weights of more than 4% in the ETF. VIDI’s only individual equity holding with a weight north of 1% is the iPath MSCI India Index ETN (NYSEArca: INP), which accounts for 2.15% of the ETF’s weight.

Although VIDI has significant foreign currency exposure, including an almost 19% weight to the euro, the fund has sharply outperformed the MSCI EAFE Index this year.

“While some investment companies advertise a reduced fee, they may do so by keeping the prospectus sticker set at a higher price, reserving the right to later revert back to the higher fee. Contrary to this method, Vident has elected to stay true to their promise to put the interests of investors first, and VIDI’s management fee will be permanently lowered without looking back. This decision is supported by the company’s distinct ownership structure, owned by the Vident Investors’ Oversight Trust, with no one party having shareholder equity,” said Vident in the statement.