State Street joins ASX ETF price war as peers race ahead

afr.com:

The $6 trillion provider of Australia’s oldest exchange-traded fund has slashed its management fees, a move that brings its costs in line with its faster growing competitors.

State Street Global Advisors SPDR S&P/ASX 200 Fund, which trades under the ticker STW, said it would now charge a management fee of five basis points, compared to 13 basis points previously.

State Street has cut fees on its flagship ETF.  Bloomberg

The fund, which now has $4.6 billion of assets, was the first exchange-traded fund to list in Australia, in August 2001. State Street was also behind the first ETF globally when it launched the SPDR S&P 500 Trust ETF in the US.

STW is the largest ASX 200 index ETF, slightly edging out BlackRock’s iShares Core S&P/ASX 200 ETF, which trades under the ticker IOZ and which has $4.3 billion of assets. The Vanguard Australian Shares Index, or VAS, has $12.7 billion of assets and is tied to the S&P/ASX 300 index.

The drop in fees to five basis points means State Street’s ETF is the second cheapest of the S&P/ASX 200 tracking funds. Betashares A200 ETF, which has $3.3 billion of assets under management, charges an annual management fee of four basis points.

The Betashares ETF does not, strictly speaking, track the S&P/ASX 200 index. Instead, it is tied to a close proxy index overseen by index provider Solactive.

State Street’s move comes as its competitors outpace them in gathering assets. The iShares S&P/ASX 200 ETF has added $950 million of funds so far this year, the most for any ASX-listed fund, according to ETF provider Global X.

That is followed by the Betashares A200 ETF, which has added $850 million. Vanguard’s VAS has grown by $776.4 million.

While State Street was an early mover in exchange-traded