BlackRock Resets the Bar for Dividend ETFs With Fee Cut | ETF Trends

Advisors and end clients continue to save as asset managers like BlackRock make more ETFs available for net expense ratios of 0.05% or less. Today, BlackRock announced it was cutting the fee of the iShares Core Dividend ETF (DIVB) to 0.05%, from 0.25%. The $225 million ETF was previously known as the iShares U.S. Dividend & Buyback.

DIVB joins BlackRock’s other low-cost ETF lineup, including the iShares Core Dividend Growth ETF (DGRO) and the iShares Core High Dividend ETF (HDV), which manage $22 billion and $12 billion in assets, respectively, and charge fees of 0.08%.

However, with the fee reduction, the DIVB will be modestly cheaper than the Vanguard Dividend Appreciation ETF (VIG) and the Vanguard High Dividend Yield Index ETF (VYM), which manage $58 billion and $45 billion, respectively, and charge fees of 0.06%. The Schwab US Dividend Equity ETF (SCHD), which has a similar 0.06% fee, is the third largest U.S. dividend ETF with $37 billion in assets. 

Dividend ETFs have been extremely popular with advisors in 2022, according to VettaFi, as they seek out income alternatives for clients in a rising interest rate environment. SCHD pulled in $12 billion of net inflows year-to-date through October 21, the seventh most within the industry. VYM and HDV gathered $8.0 billion and $4.9 billion, respectively.

The move by BlackRock is consistent with their approach to offer advisors and end clients more moderately priced ETFs rather than cut the fees of their most widely used products. For example, in March 2021, the firm slashed the expense ratios of nine products, including the iShares Morningstar Value ETF (ILCV), the iShares Morningstar U.S. Equity  ETF (ILCB), and the iShares Morningstar Growth ETF (ILCG) to less than 0.05%.

BlackRock did not provide further details on planned changes to the DIVB portfolio.

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