BlackRock lowers fees on US mid- and small-cap style ETFs

Oct 24th, 2020 | By | Category: Equities

Sector & Thematic Strategy Briefing - Wednesday 29th March 2023 - The Berkeley, London Please join us for our annual sector and thematic investing event, featuring DWS Xtrackers, First Trust, MSCI, Redburn and Sprott Asset Management. Please register now if you would like to attend.

BlackRock has reduced the fees charged on a quartet of ETFs providing exposure to value and growth stocks within the mid-cap and small-cap segments of the US equity market.

BlackRock slashes fees on US mid- and small-cap style ETFs

Current investors in the ETFs will save approximately $15m in annual fees.

Each ETF has seen its expense ratio reduced by seven basis points.

With the funds collectively housing over $21 billion in assets under management, the fee cut equates to annual savings of approximately $15 million for investors at present asset levels.

The $4.6bn iShares S&P Mid-Cap 400 Value ETF (IJJ US) has been cut from 0.25% to 0.18%.

The $7.1bn iShares S&P Mid-Cap 400 Growth ETF (IJK US) has been cut from 0.24% to 0.17%.

The $5.1bn iShares S&P Small-Cap 600 Value ETF (IJS US) has been cut from 0.25% to 0.18%.

And the $4.4bn iShares S&P Small-Cap 600 Growth ETF (IJT US) has also been cut from 0.25% to 0.18%.

The fee cuts place the ETFs on a more competitive level with funds offered by Vanguard that track the same indices and come with expense ratios of 0.15% or 0.16%. Vanguard’s suite houses around $2.3bn in AUM.


The funds provide exposure to investment style indices based upon S&P Dow Jones Indices’ flagship US equity size benchmarks – S&P Mid-Cap 400 and S&P Small-Cap 600.

Each constituent in the parent index is ranked according to a value score (based on change in earnings-per-share over current price, book value to price ratio, and sales-per-share growth rate) and, again, according to a growth score (based on earnings to price ratio, share price momentum, and sales to price ratio). The constituents are then ranked a final time based on the ratio of their value ranking to growth ranking.

The highest-ranked firms accounting for 33% of the parent index’s market capitalization are added to the value style index at 100% of their market cap. Similarly, the lowest-ranked firms that account for 33% of the parent index’s market cap are added fully to the growth index.

The companies that sit in the middle of the rankings – so called blended companies – are determined to have neither pure growth nor pure value characteristics and are added to both indices; however, their market capitalization is divided between the growth and value indices in proportion to their distance from the pure style regions.

Tags: , , , , , , , ,

Leave a Comment