iShares: Fees On 40 ETFs Won't Be Rising
December 30, 2012
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(Editor's note: An earlier version of this story, sourced from regulatory filings saying fund fees would be heading higher on 40 ETFs, was not accurate, iShares officials said. They said the filings reflected conditions in the 12 months ended Aug. 31, 2012, and that current fund economics had changed, obviating a need to raise fees on the funds. A clarified repetition of the story follows, and we regret any confusion the original story caused.)
iShares, the ETF firm that created a stir two months ago with the launch of an ultra-cheap lineup of 10 “Core” funds, filed regulatory paperwork detailing fee increases on 40 funds in its lineup of 280 ETFs in separate prospectus updates, which would put its recent fee-cutting moves and its role in an industrywide fee war in a whole new light. But the paperwork reflects the fund economics for the 12 months ending Aug. 31, 2012, the firm said, so the fees won't be rising.
The funds involved include some of its bigger strategies, such as the $47 billion iShares MSCI Emerging Markets Fund (NYSEArca: EEM), the $9.33 billion iShares MSCI Brazil Fund (NYSEArca: EWZ) and many of its other popular single-country equity funds.
The changes in the prospectuses come annually, and reflect fund economics between Aug. 31, 2011, and Aug. 31, 2012, meaning changes in funds' assets since then have obviated the accuracy of the information detailed in the prospectuses, iShares officials told IndexUniverse. In other words, the information in the prospectuses no longer reflects current conditions, so no fees will be changing, the iShares officials said.
The paperwork, which was effective Jan. 1, also described decreasing fees on three other ETFs with MSCI indexes, and iShares officials said those expense ratios won't be changing either.
Even if the fee changes aren't even on the table, the 40 fee hikes described in the separate filings with the Securities and Exchange Commission would be modest in percentage terms.
As an example, iShares is increasing the annual expense ratio on its huge fund EEM by nearly 3 percent. Investors will now pay 0.69 percent instead of 0.67 percent, or $69 for each $10,000 invested, compared with $67 previously. VWO, by comparison, costs 0.20 percent a year.
In any case, the 40 funds whose prospectuses described higher fees, and their percentage moves, are as follows: