NEW YORK, Mon Sep 10, 2012 – BlackRock Inc. will announce lower fees on some of its core iShares exchange-traded funds in the fourth quarter to better compete with lower-cost products, CEO Laurence Fink said on Monday.
The changes will only apply to some ETFs with lower-fee competition and will not be a “wholesale fee change on everything,” Fink told attendees at the Barclays’ Global Financial Services Conference in New York.
Exchange-traded funds are baskets of securities, like mutual funds, but they trade on exchanges, like individual securities. They are cheaper than mutual funds and allow investors to trade throughout the day, with simultaneous pricing, unlike mutual funds, which price at the end of the day.
Over the past few years, BlackRock’s iShares ETFs have been losing U.S. retail market share as Vanguard Group has aggressively rolled out cheaper ETFs.
There are 15 investment strategies in which iShares has one or two ETFs that compete directly with Vanguard ETFs but cost more, according to a recent report by Bernstein Research. In all of those categories, Vanguard is taking business away from BlackRock.
This is most notable with one of BlackRock’s biggest ETFs, the $35 billion iShares MSCI Emerging Markets Index Fund, from which investors withdrew w$1.14 billion in the three years ending July 31, according to Bernstein.