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BlackRock's iShares Struts Its Low Fee ETF Stuff

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November 10, 2015 3:38 pm
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BlackRock's iShares Struts Its Low Fee ETF Stuff

Just over three years ago, BlackRock Inc.'s (NYSE: BLK) iShares unit, the world's largest issuer of exchange traded funds, created the iShares Core Series, then a suite of 10 ETFs aimed at cost-conscious, long-term investors.

 

Comprised of four new and six existing funds, one of the pillars of the iShares Core Series was and continues to be low fees, one of the primary reasons so many buy-and-hold investors have ditched high-fee mutual funds for ETFs over the years. Fast-forward 37 months and not only has the iShares Core Series significantly expanded in terms of number of ETFs, but iShares is also taking the fee fight to low-cost leaders such as Vanguard and Charles Schwab Corp. (NYSE: SCHW).

 

In an announcement made Tuesday, iShares said it is paring the fees on seven of its core ETFs, bringing some of the annual expense ratios on those funds to as low as 0.03 percent per year. That works out to be a mere $3 for every $10,000 invested.

 

The $2.7 billion iShares Core S&P Total U.S. Stock Market ETF (NYSE: ITOT) is charging 0.03 percent per year, down from 0.07 percent. With that new lower fee, ITOT is now slightly less expensive than popular, rival broad market U.S. equity ETFs, such as the Schwab U.S. Broad Market ETF (NYSE: SCHB) and the Vanguard Total Stock Market ETF (NYSE: VTI). Those ETFs charge 0.04 percent and 0.05 percent a year, respectively.

 

ITOT is also changing indexes. On or around Dec. 18, ITOT will switch benchmarks to the S&P Total Market Index, which will bolster the ETF's exposure to micro- and small-cap stocks, according to iShares

 

Among other U.S.-focused equity ETFs in the core suite, the iShares Core U.S. Growth ETF (NYSE: IUSG) and the iShares Core U.S. Value ETF (NYSE: IUSV) saw annual fees pared to 0.07 percent from 0.09 percent.

 

Ishares is also making some changes to the fixed income portion of its core lineup, including reducing the annual expense ratio on the iShares Core Total USD Bond Market ETF (NYSE: IUSB) to 0.12 percent from 0.15 percent.

 

iShares Core International Aggregate Bond ETF (NYSE: IAGG) seeks to track the investment results of an index composed of international investment-grade bonds while seeking to mitigate foreign currency risk. IAGG will become part of the iShares Core at launch on Thursday. The iShares Core GNMA Bond ETF (NYSE: GNMA) will no longer be part of the Core line-up and will change its name to the iShares GNMA Bond ETF,” said the issuer in a statement.

 

Three of the core suite's international equity offerings are also getting lower fees. For example, the $8.8 billion iShares Core MSCI Emerging Markets ETF (NYSE: IEMG) has a new annual fee of 0.12 percent. That makes IEMG less expensive than the Vanguard FTSE Emerging Markets ETF (NYSE: VWO), the largest emerging markets ETF. VWO charges 0.15 percent per year. 

 

The iShares Core MSCI Europe ETF (NYSE: IEUR) and the iShares Core MSCI Pacific ETF (NYSE: IPAC) are now charging 0.12 percent a year, down from 0.14 percent.

 

The iShares Core Suite now has 24 ETFs with a combined $62.8 billion in assets under management, according to iShares


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