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BlackRock has reduced the fees charged on three socially responsible ETFs and eight fixed income ETFs listed in the US. The 11 funds have total assets under management of approximately $4 billion.
BlackRock’s latest fee reductions include lowering the TERs of three ESG-focused ETFs by 20 basis points each, as well as the TERs of eight bond ETFs by between two and ten basis points.
The largest fee reductions were applied to the socially responsible ETFs which saw their total expense ratios (TERs) lowered by as much as 20 basis points. The three ETFs track MSCI indices composed of large- and mid-cap companies listed in the US, internationally, or in emerging markets. Each fund screens for equities that have positive environmental, social and governance (ESG) characteristics, as identified by MSCI, while exhibiting risk and return characteristics similar to those of their parent indices.
BlackRock also made reductions of between two and ten basis points on eight bond ETFs. The funds include a range of broad market US dollar bond ETFs targeting various maturity segments. Also included are funds targeting inflation-protected securities, and fallen angel bonds (those recently downgraded to high yield), plus two ETFs providing exposure to US and international aggregate bond indices.
The move by BlackRock follows a previous round of fee slashing which took place in October 2016 whereby the firm reduced the fees charged on seven of its US-listed Core ETFs, a suite of diversified, low cost funds designed for investors seeking a buy-and-hold strategy. While those reductions did drive new flows into the funds, it is yet unclear whether this latest round will repeat such success; ESG-focused ETFs, once thought to be a major trend in the growth of the ETF industry, have struggled to attract investor demand.
The ETFs and their respective TER reductions are outlined below:
iShares MSCI EM ESG Optimized ETF (Nasdaq: ESGE) reduced from 0.45% to 0.25%.
iShares MSCI EAFE ESG Optimized ETF (Nasdaq: ESGD) reduced from 0.40% to 0.20%.
iShares MSCI USA ESG Optimized ETF (Nasdaq: ESGU) reduced from 0.28% to 0.15%.
iShares Fallen Angels USD Bond ETF (Nasdaq: FALN) reduced from 0.35% to 0.25%.
iShares 0-5 Year TIPS Bond ETF (NYSE Arca: STIP) reduced from 0.10% to 0.06%.
iShares 0-5 Year Investment Grade Corporate Bond ETF (Nasdaq: SLQD) reduced from 0.08% to 0.06%.
iShares Core 5-10 Year USD Bond ETF (NYSE Arca: IMTB) reduced from 0.08% to 0.06%.
iShares Core 1-5 Year USD Bond ETF (Nasdaq: ISTB) reduced from 0.08% to 0.06%.
iShares Core 10+ Year USD Bond ETF (NYSE Arca: ILTB) reduced from 0.08% to 0.06%.
iShares Core Total USD Bond Market ETF (Nasdaq: IUSB) reduced from 0.08% to 0.06%.
iShares Core International Aggregate Bond ETF (Bats: IAGG) reduced from 0.11% to 0.09%.