Junk Bond ETF Fee Battle Intensifies | ETF Trends

This year, fees have been falling across the exchange traded funds (ETFs) landscape. Junk bond ETFs are getting in on the act.

BlackRock, the largest ETF sponsor recently (and quietly) announced a lower fee for the iShares Broad USD High Yield Corporate Bond ETF (CboeBZX: USHY). USHY targets the CE BofAML US High Yield Constrained Index.

“BlackRock Inc., the world’s largest issuer of exchange-traded funds, has slashed the cost of its iShares Broad USD High Yield Corporate Bond ETF by waiving part of the management fee, regulatory documents show. But rather than shout about the move, the discount was announced without fanfare — in a footnote on page 94 of a revised filing last month,” reports Bloomberg.

USHY’s web page indicates the fund’s expense ratio is 0.22%, but that fee is expected to decline to 0.15%. Last month, State Street, the third-largest ETF sponsor, announced changes for the fund now known as the SPDR ICE BofAML Broad High Yield Bond ETF (NYSEARCA: CJNK), including making that fund’s annual fee 0.15%.

CJNK will be a lower cost alternative to the SPDR Barclays High Yield Bond ETF (NYSEArca: JNK), the second-largest junk bond ETF. JNK, which is highly popular with institutional investors, will retain its annual fee of 0.40%.

BlackRock also offers the iShares iBoxx $ High Yield Corporate Bond ETF (NYSEArca: HYG), the largest junk bond ETF. That fund has an expense ratio of 0.49%.

Another filing indicates the Xtrackers USD High Yield Corp Bond ETF (NYSEArca: HYLB) is also entering the junk bond ETF fee war. The $2.71 billion HYLB will also charge 0.15%.

“DWS’s Xtrackers USD High Yield Corporate Bond ETF, aka HYLB, also costs $1.50 after a fee waiver, a March 29 document shows,” according to Bloomberg.

For more information on the fixed-income space, visit our bond ETFs category.