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The ETF fee race is far from over. BlackRock (NYSE: BLK ) has announced fee cuts for seven iShares exchange-traded funds in response to competition from low-cost competitors such as Vanguard Group. According to Tuesday’s announcement the new management fee for BlackRock’s iShares Core S&P Total U.S. Stock Market ETF will be 0.03%, making it the cheapest ETF on the market, excluding those with temporary fee waivers. In plain English that means that fees amount to just $3 per year for every $10,000 invested, writes Chris Dieterich for Barrons . (click to enlarge) Via S&P CapIQ BlackRock cuts fees in response to low-cost rivals Vanguard and Charles Schwab (NYSE: SCHW ) “The entire U.S. stock market is the epitome of buy and hold, and price does matter more to those kinds of investors. It’s really importantly to have the most cost-efficient fund in that space,” said Ruth Weiss, head of the U.S. iShares team. Other ETFs in the “core” buy-and-hold friendly product suite will have their fees reduced. BlackRock also announced the iShares Core International Aggregate Bond ETF, a new international bond ETF for which trading will begin on Thursday. Its expense ratio of 0.15% is even less than the rival Vanguard Total International Bond ETF, which has a ratio of 0.19%. BlackRock also announced that its iShares Core S&P Total U.S. Stock Market ETF will follow the S&P Total Market Index from next week, a move which will make it more exposed to micro- and small-cap U.S. companies. As a result it will become more similar to the Vanguard Total Stock Market ETF. Rivals eating in to BlackRock ETF market share BlackRock currently holds $818 billion in ETFs, representing 38% of a total $2.1 trillion U.S. market. Although it remains the largest asset manager in the world, BlackRock has been losing market share to low-cost rivals Vanguard and Charles Schwab. At the end of 2006 BlackRock held 58% of the total ETF market. In that time Vanguard has grown from 5.2% to 22% of the total ETF market share. Until the BlackRock announcement, Charles Schwab offered the two cheapest ETFs, at 0.04%. Although Schwab only manages $37.5 billion in assets, or 1.8% of the market, the company is growing fast. In 2015 Schwab’s ETF asset growth rate is 28%, compared to 7.8% for BlackRock and 12% for Vanguard. Disclosure: None Scalper1 News
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