ETF providers cut fees

ETF providers cut fees

BlackRock and Vanguard have both announced fee reductions within their ETF product suites.


Speaking to InvestorDaily, BlackRock Australia head of iShares Jon Howie explained the fee change was prompted by changes made to BlackRock’s US ETFs to better meet the new US Department of Labor fiduciary rule.

“What’s important to note is that those fee changes are actually the result of fee changes that we’ve made on a range of funds in the United States, and one of the interesting outcomes of running a global business is that we’re actually able to leverage our global scale,” he said.

Mr Howie said the reduction in management fees is unlikely to affect the ETF industry’s growth greatly, noting current growth “both here and globally has been incredibly strong over the last few years”.

“I think the things that are affecting the growth of ETFs are some of the changes to the regulatory environment, so with the change in the regulatory environment in Australia we’ve seen a big pick up in the growth rate of exchange traded funds,” he said.

The announcement follows a statement from Vanguard on 3 October that five of its ETF products would also see fee reductions.

“This round of management expense ratio reductions applies to three wholesale managed funds and two ETFs, continuing Vanguard’s long track record of reducing costs for investors as its funds benefit from economies of scale,” said Vanguard.

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