Guggenheim Partners, the money manager behind the $4.13 billion S'P 500 Equal Weight ETF (RSP), has reported higher expense ratios in four of its S'P-linked ETFs effective March 1.
The firm also said in a slew of prospectus-update filings that two ETFs—one tied to a Russell benchmark and the other to an emerging markets portfolio—saw their ratios drop in the past year. The ETFs in question are listed in the table below.
The biggest increase was seen in the Guggenheim S'P MidCap 400 Pure Value ETF (RFV), with its current expense ratio of 0.40 percent representing an 11 percent increase from the stated ratio a year ago.
The higher ratios equate to higher acquired fund fees associated with the S'P benchmarks these ETFs track, according to Guggenheim. Indeed, management fees on all of the funds remained unchanged, but acquired funds fees went up associated with rebalancing of securities in the underlying S'P indexes.
To be exact, Guggenheim said that the S'P 400 MidCap and S'P 600 SmallCap benchmarks linked to these funds increased their weightings of business development companies (BDCs). The higher allocations resulted in a proportionate increase in acquired funds expenses for the ETFs that track them.
BDCs are public vehicles that invest in private equity, lending to small and midsize companies, and are considered closed-end funds—something that forces ETF providers serving up exposure to BDCs to disclose acquired fund fees that represent the embedded stock price of those companies.
Management fees on the Russell-linked and emerging market ETFs were also left unchanged, with the decline in total expense ratio said to be related to other costs Guggenheim “can’t control,” a company source told IndexUniverse.
ETF providers are required to update prospectuses on their funds at least once a year—and they have to do so within 120 days of the end of their fiscal year.
The March 1 filings fulfilled that regulatory requirement as Guggenheim’s fiscal year for these funds ended Oct. 31.
Guggenheim manages more than $14.4 billion in assets spread across more than 65 U.S.-listed ETFs, making it the eighth-largest ETF provider in the country by assets.
|ETF||Ticker||Old ER||New ER||% Change|
|Guggenheim S'P MidCap 400 Pure Value||RFV||0.36||0.40||11.00%|
|Guggenheim S'P SmallCap 600 Pure Value||RZV||0.36||0.38||5.50%|
|Guggenheim S'P MidCap 400 Equal Weight||EWMD||0.41||0.43||4.80%|
|Guggenheim S'P SmallCap 600 Equal Weight||EWSM||0.42||0.43||2.40%|
|Guggenheim Russell 2000 Equal Weight||EWRS||0.44||0.43||-2.20%|
|Guggenheim MSCI Emerging Markets Equal Weight||EWEM||0.71||0.70||-1.40%|