Competitive Spirit Amongst ETF Providers

ETF providers are fighting for ultimate supremacy in the market by cutting prices and launching new ETFs

Lee Davidson 4 January, 2013 | 12:49AM
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The ongoing battle between exchange-traded fund (ETF) providers escalated further last month with more announcements of price cuts, ETF launches, ETF closures, and new wrinkles in the replication method debate.

iShares vs. Ossiam

A new front in the fee war was opened in December as iShares launched a new range of funds on the London Stock Exchange that track MSCI minimum volatility indices. These ETFs sport significantly lower fees than their nearest competitors, which largely consist of funds in Ossiam’s minimum variance lineup. The differences in the fee levels of the new iShares funds and their most closely comparable Ossiam rivals are non-trivial. For instance, iShares S&P 500 Minimum Volatility (SPMV) has a total expense ratio (TER) of 0.20% versus the Ossiam ETF US Minimum Variance (LUMV) which has a TER of 0.65%. Similarly, iShares MSCI Emerging Market Minimum Volatility (EMMV) has a TER of 0.40% versus the 0.75% levied on Ossiam ETF Emerging Markets Minimum Variance (DEMV). Clearly, when it comes to fees, ETF providers are becoming increasingly cognisant of the role fees play in investors’ decision-making process.

Boost ETP Arrives on the Scene

Boost ETP, a new exchange-traded product (ETP) provider, launched its first two ETPs on the London Stock Exchange in December. Boost ETP was formed in October by former ETF Securities employees Hector McNeil and Nik Bienkowski.

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About Author

Lee Davidson

Lee Davidson  is an ETF analyst with Morningstar Europe.

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