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BlackRock Hits Back at Vanguard, Schwab with iShares ETF Fee Cuts


Looks like it’s a race to the bottom in the ETF business on fees.

BlackRock has announced expense ratio cuts at several of its existing products as it creates the new iShares Core Series targeting buy-and-hold investors.

The move follows fee reductions at rivals Vanguard and Charles Schwab.

“The iShares Core Series is a suite of products offering a competitively priced, diversified, tax-efficient family of ETFs that investors can use as building blocks for the heart of their portfolios in domestic and international equities and U.S. fixed income,” BlackRock said.

The series is comprised of six existing ETFs and four new iShares.

BlackRock has lowered fees on these six ETFs:

  • iShares Core S&P 500 ETF (NYSEArca IVV)
    current price 0.09%
    new price 0.07%
  • iShares Core S&P Total U.S. Stock Market ETF (ISI) – will trade under new ticker ITOT
    current price 0.20%
    new price 0.07%
  • iShares Core S&P Mid-Cap ETF (IJH)
    current price 0.20%
    new price 0.15%
  • iShares Core S&P Small-Cap ETF (IJH)
    current price 0.20%
    new price 0.16%
  • iShares Core Long-Term U.S. Bond ETF (GLJ) – will trade under new ticker ILTB, changing tracking index to Barclays US Long Government/Credit Bond
    current price 0.20%
    new price 0.12%
  • iShares Core Total U.S. Bond Market ETF (AGG)
    current price 0.20%
    new price 0.08%

These are the new ETFs expected to begin trading on or about Oct. 22:

  • iShares Core MSCI Total International Stock ETF (IXUS)
  • iShares Core MSCI Emerging Markets ETF (IEMG)
  • iShares Core MSCI EAFE ETF (IEFA)
  • iShares Core Short-Term U.S. Bond ETF (ISTB)

BlackRock also said it is integrating the iShares and BlackRock U.S. retail sales teams.

The firm’s announcement comes after Vanguard earlier this month said it plans to change the benchmarks at several of its ETF in a move designed to allow Vanguard to cut ETF fees. [Vanguard Changing Indices for Several ETFs]

In late September, Schwab unveiled fee reductions in its family of ETFs. [Schwab Takes the Lead in ETF Price War]

BlackRock’s response to its competitors lowering ETF costs wasn’t unexpected. BlackRock CEO Larry Fink last month said the firm planned to slash the management fees charged by some of its core-strategy ETFs before the end of the year. [iShares to Cut Some ETF Fees in Fourth Quarter]

BlackRock is the largest ETF manager and has attracted $50 billion in net new assets year to date to lead the industry. However, Fink in September acknowledged that iShares was losing assets in large, liquid funds to lower-priced ETFs managed by Vanguard. [BlackRock Fires Latest Salvo in ETF Fee War]

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.