State Street cuts fees on $78bn of ETFs in its core line
State Street Global Advisors chopped fees Tuesday on nearly half the ETFs in its Portfolio line of products, citing new costs that are below similar funds from Vanguard, BlackRock and Charles Schwab.
The fee reductions apply to10 SPDR exchange-traded funds that represent a total of more than $78 billion in assets. With the cuts, investors can use the ETFs to build diversified portfolios that have total expense ratios under 10 basis points.
However, the reductions apply to already low-cost products; in some cases, the new fees are just a basis point lower.
“There’s been an ongoing race to bring fees down across the board within the ETF industry for years. And especially with more advisors building asset-allocation strategies using low-cost index ETFs as the building blocks,” said Todd Rosenbluth, head of research at VettaFi. “Fees matter to those investors that are coming into the ETF market, and expense ratio is one of the easiest things to search for.”
The reduction on the SPDR Portfolio S&P 500 ETF put new fees at 2 bps, compared to the prior level of 3 bps.
“For most investors, that’s not as important,” Rosenbluth said. “If you were in a 3-bp S&P 500 ETF yesterday with your clients, you’re unlikely to make any changes to your portfolio as a result of the move.”
Within the core ETFs business, which includes State Street’s Portfolio line, the company is considerably smaller than the likes of Vanguard and BlackRock’s iShares in terms of assets, Rosenbluth noted. Such products have ultra-low fees as selling points and are focused on buy-and-hold investors.
“In the last two years, State Street Global Advisors has reduced expense ratios on 20 ETFs across our U.S. line up, demonstrating our commitment to the democratization
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