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Last year was marked by fierce competition among ETF issuers, with a race to the bottom in fees across Europe.
Despite industry experts saying fees have bottomed out, periodic reductions were seen across a wide range of asset classes, causing headaches for fund pickers across the continent.
State Street Global Advisors (SSGA) took the lead in lowering fees on its S&P 500 ETF, creating the cheapest ETF in Europe that tracks the flagship U.S. index.
UBS Asset Management has reduced the prices of hundreds of ETFs, but favorable market conditions, including expected interest rate cuts, have led to lower fees for DWS Gold ETC, making it the cheapest on the market.
Considering this, ETF stream We analyze the five most important ETF fee cuts in Europe’s recent price wars.
State Street offers Europe’s lowest priced S&P 500 ETFs
SSGA now offers the lowest-cost S&P 500 ETF in Europe after last year’s largest fee reduction in recent history.
The company lowered the total expense ratio (TER) of the SPDR S&P 500 UCITS ETF (SPY5) from 0.09% to 0.03% in November 2023.
This adjustment makes SPY5 the cheapest S&P 500 ETF in Europe, outperforming competitors such as the synthetically replicated Invesco S&P 500 UCITS ETF (SPXS) with a TER of 0.05%.
SSGA also reduced fees for the SPDR S&P 500 EUR Hdg UCITS ETF (SPPE) to 0.05% and fees for the SPDR S&P 500 ESG Leaders UCITS ETF (SPPY) to 0.03%. After these adjustments, SSGA now boasts Europe’s cheapest currency-hedged ETF and S&P 500 ESG ETF.
The move firmly establishes SSGA within the European ETF market, with the issuer noting that European-based ETFs have invested nearly $15 billion annually in U.S. stocks over the past decade.
The company said the cuts were made to make the market more competitive, but also part of a broader effort to improve access for European investors.
DWS Gold ETC takes the top spot in fees
Last year, DWS became Europe’s cheapest gold traded commodity (ETC) provider after lowering its fees on Xtrackers IE Physical Gold ETC Securities (XDGU).
XDGU has been slightly lowered from 0.12% to 0.11%, but this move puts ETC ahead of its four biggest rivals, Amundi, Invesco, Blackrock, and WisdomTree, which offer gold ETC at 0.12%. .
The correction comes at a time of favorable market conditions, with gold prices reaching a seven-month high and a potential interest rate cut on the horizon.
This pricing follows the trend of lower fees in the gold ETC market, especially during the early stages of COVID-19, when companies were aggressively competing for capital inflows, and the Invesco Physical Gold ETC (SGLD) TER. It was halved from 0.24% to 0.12%.
In March 2021, DWS lowered fees for its entire currency-hedged physical gold ETC, making it the cheapest ETC on the market.
DWS also cut fees on 31 ETFs last December, including the £2.5bn XTrackers Eurozone Government Bond UCITS ETF (XGLE), in a bid to catapult rival Amundi into Europe’s second-biggest ETF issuer. I kept trying.
UBS AM lowers fees on hundreds of ETFs
UBS AM significantly reduced more than 200 ETFs in January, most notably the World Equity ETF.
Fees on the £952m UBS ETF MSCI World UCITS ETF (UC55) have been cut by two-thirds to 0.10%, ahead of the 0.12% XTrackers MSCI World UCITS ETF (XDWL).
The asset manager’s wide-ranging fee cuts come after it suffered $715 million in ETF outflows in 2023, the largest of Europe’s eight largest issuers, according to ETF Book data. .
UBS AM also added that the bank’s acquisition of Credit Suisse in March last year provided economies of scale.
“We have been able to reduce the cost of ownership for a wide range of ETFs while maintaining our commitment to the highest quality,” said Clemens Reuter, Head of ETF and Index Fund Client Coverage at UBS AM.
Invesco launches cheapest global ETF
While not strictly a fee reduction, Invesco launched Europe’s cheapest global ETF last June, marking its entry into the global stock war.
The Invesco FTSE All World UCITS ETF (FWRA) launched with a TER of 0.15%, below rivals SSGA and BlackRock.
FWRA’s price was 2 basis points lower than SSGA’s SPDR MSCI ACWI IMI UCITS ETF (SPYI) and below BlackRock’s iShares MSCI ACWI UCITS ETF (SSAC).
FWRA hoped that this measure would increase market interest in global equities. This ETF tracks the FTSE All World Index, which covers 4,000 companies in 49 markets.
Invesco said it can afford to keep its TER low by using a sampling strategy that incorporates quantitative analysis to select stocks using factors such as country weights, industry weights and liquidity.
This means keeping fewer constituents in the index while replicating performance as accurately as possible.
Global X reacts to BlackRock’s copper wire launch
Last June, Global X lowered the total expense ratio of its Global
Global X intended to prevent investors from switching from its $51 million ETF to BlackRock’s products. This two-pronged strategy of his is the only copper mine ETF in the European market, Global X and he will launch his COPX in November 2021.
Despite launching COPX in November 2021, Global
The move appears to have had only limited impact so far, with COPX’s assets under management (AUM) declining by $7 million since the fee reduction, despite posting a 9.2% return over the past year.
BlackRock launched COPM, which leverages copper’s critical role in renewable energy and electrification to target net-zero transition.
With demand surging, JPMorgan predicts copper supplies will need to increase by 54% by 2030 to reach net-zero targets.
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