U.S. Markets closed

BlackRock Takes Low Fee Approach in Europe


BlackRock’s (BLK) iShares unit, the world’s largest issuer of exchange traded funds, will pare fees on six of its Europe-listed ETFs and will introduce eight new products in a bid to cement its status as Europe’s dominant ETF sponsor.

The move is similar to iShares’ introduction of its core series of ETFs in the U.S. That 2012 roll-out included substantial fee reductions on existing ETFs as well as the introduction of new products. [Investors Flocking to iShares Core ETFs]

Earlier this year, BlackRock said it would like to expand its low-cost lineup to include more international offerings. As many as 10 new, low-cost international ETFs could be added to the iShares core group later this year, the firm said in January.

“At $205 billion, BlackRock has the biggest share in the European ETF market, or about 38 percent,” report Christopher Condon and Mary Childs for Bloomberg.

“BlackRock’s new or newly-priced ETFs in Europe will carry an average expense ratio of 0.17 percent. Its iShares Core S&P 500 UCITS ETF will be cheaper than its Vanguard competitor,” according to Bloomberg.

Although ETF fee reductions often spark talk of competition from Vanguard, a familiar to iShares in the U.S., Canada and, to a lesser extent, the U.K., the next largest ETF issuers in Europe after iShares are Deutsche Bank and Societe Generale’s Lyxor. European growth has lagged behind that seen in the U.S., but other U.S. issuers, including WisdomTree (WETF) and First Trust, are looking to bolster their European footprints. [First Trust Eyes Europe Expansion]

Nine of the 10 iShares core European ETFs will be global equity funds while five will be bond ETFs, Bloomberg reported.

While lower cost ETFs are thought to be aimed at retail investors, the U.S-listed iShares core funds have gained a following among institutional investors. For example, the iShares Core MSCI Emerging Markets ETF (IEMG) and the iShares Core MSCI EAFE ETF (IEFA) have pulled in $4.5 billion and $2.2 billion, respectively, in less than two years of trading. [iShares Core ETFs Gain Institutional Following]

ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of IEMG.

The opinions and forecasts expressed herein are solely those of Tom Lydon, 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.