As the battle of the small trims unfolds, BlackRock plans to pay more ETFs | Jobs Vox


(Bloomberg) — Asset management giant BlackRock Inc. is cutting costs from its eight exchange-traded funds as the industry’s never-ending fee war continues.

The world’s largest ETF issuer is cutting the expense ratios of three corporate bond funds and four equity products that track factors, BlackRock said in an email Friday. The $23 billion iShares 1-5 Year Investment Grade Corporate Bond ETF (ticker IGSB), the largest ETF on the list, now carries 0.04% versus 0.06%.

Such small fee cuts are common in the $6.7 trillion ETF industry as companies compete for liquidity in an ever-expanding market. BlackRock’s cuts follow similar moves from Charles Schwab Corp., Vanguard Group Inc. and State Street Global Advisors, which have lowered their expenses by just one or two basis points over the past year.

While the cuts are relatively small, in the view of VettaFi’s Todd Rosenbluth, they should support the trend of investors moving away from fixed-income mutual funds toward bond ETFs.

“By 2022, many investors will shift from bond mutual funds to bond ETFs, breaking long-term shareholder loyalty,” said Rosenbluth, an ETF data provider and research consultant. “This trend is likely to continue in 2023 as fees continue to decline for ETFs.”

BlackRock ranks as the largest ETF issuer, commanding approximately $2.2 trillion in 392 U.S. funds.

(Updates with more background on Blackrock. An earlier version of this story corrects the types of ETFs that reduce expense ratios.)

©2022 Bloomberg LP


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