Last month BlackRock Inc. (NYSE: BLK), the world’s largest asset manager, reduced fees across its iShares Core exchange traded fund suite. The fee reductions beat or match the low expense ratios first established by Vanguard ETFs.
Long-term investors will now enjoy the tax efficiency, liquidity and quality of these core ETF options at a greater value.
Following the changes, the iShares Core S&P 500 ETF is now among the least expensive ETF options available, outpricing options from many of its competitors, namely Vanguard, which has recently been gaining traction as a low-cost provider. However, the reigning cheapest ETF on the market is still the Schwab U.S. Broad Market ETF (NYSEArca: SCHB), which has a 0.03% expense ratio.
SEE MORE: A Look at the new fee Cuts From BlackRock
Perhaps not surprisingly, the latest batch of fee cuts from iShares is stoking big inflows to the effected ETFs.
“BlackRock has attracted nearly $5 billion to its lowest-cost segment of exchange-traded funds since it announced a price cut last month aimed at financial advisers, the company said on Tuesday,” reports Reuters.
The iShares core suite of ETFs is set to expand today with the debuts of the iShares Core U.S. REIT ETF (USRT) and iShares Core 5-10 Year USD Bond ETF (IMTB). Both of the funds will come with a low 0.08% expense ratio.
[related_stories]USRT will replace the iShares Real Estate 50 ETF (NYSEArca: FTY), which tracks 50 of the largest U.S. REITs and has a 0.48% expense ratio. Additionally, the new real estate ETF will track the FTSE NAREIT Equity REITs Index, a cap-weighted index designed to measure the performance of U.S. listed equity real estate investment trusts, excluding timber, infrastructure and mortgage REITs.
SEE MORE: ETF Industry Edges Toward Free Core Products
“A rule announced by the Labor Department in April and effective next year sets a so-called fiduciary standard for financial brokers who sell retirement products, requiring them to put clients’ best interests ahead of their own bottom line,” reports Reuters.
A recent ETF Trends and BNY Mellon research study on the impact of the new DOL rules on the ETF industry also found that the majority of surveyed financial advisors expect to raise ETF allocations in response to the new DOL rules, citing low fees as a main factor.
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