BlackRock slashes price of flagship iShares FTSE 100 ETF (ISF)

Mar 10th, 2015 | By | Category: Equities

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BlackRock has cut the price of two iShares UK equities exchange-traded funds, including the iShares FTSE 100 UCITS ETF (Dist) (ISF), the country’s oldest and largest FTSE 100 ETF.

BlackRock slashes price of flagship iShares FTSE 100 ETF (ISF)

BlackRock has slashed the price of its flagship income-distributing iShares FTSE 100 ETF (ISF) to just 0.07% pa.

The price of this flagship income-distributing ETF has been reduced from 40 basis points to seven basis points.

The fund was the first ETF to list on the London Stock Exchange, in April 2000, and has some £3.8 billion assets under management, making it the largest UK equities ETF.

According to BlackRock, the price reduction responds to the distinct preferences of UK-based investors, many of whom favour income-distributing rather than income-accumulating funds for their UK equity holdings.

The price of the accumulating iShares Core FTSE 100 UCITS ETF (CUKX) has also been reduced to seven basis points from 10 previously, equalising the fee level on both funds and making them the UK’s lowest priced FTSE 100 ETFs.

As part of this change, BlackRock has also adjusted its iShares Core series for UK clients. This range of ETFs launched in June 2014 to provide some of the most popular market exposures at some of the lowest prices in Europe.  As of today, the series will incorporate the distributing FTSE 100 ETF in place of the accumulating fund, making the range particularly attractive for long-term UK equity investors.

The European iShares Core Series followed the launch of a similar Core series in the US in 2012 and in Canada in March 2014. The global Core ETF offering had flows of $32 billion in 2014 and the funds had $196 billion in global assets under management.  Since launch in June 2014 the UK Core series has gathered $11.4 billion in net inflows, representing 50% of total inflows into the iShares EMEA fund range over that period.

Commenting on the changes, Fergus Slinger, head of UK sales at iShares, said: “As the FTSE 100 hits record highs, the price of investing in it is falling. The ETF market throughout Europe is growing hugely, and today’s changes are about ensuring the demand UK investors have for ETFs is met with the right products at the right price.

“We launched the iShares Core range for UK investors last June, and it has grown to over $22 billion in nine months. During this time, we got a clear message from UK investors that they wanted to put distributing UK equity ETFs at the heart of their portfolios. We believe ETFs have an important role to play post the Retail Distribution Review and want to confirm our commitment to our clients in this market.  We have responded to their needs by adjusting the range and lowering prices.

“As UK ETFs turn 15, we are providing a more cost-effective way to invest in domestic equities through ETFs than ever before. With these changes today we now have the most competitive FTSE funds in the market.”

Adam Laird, Head of ETFs at Hargreaves Lansdown, commented: “The passive price war is reaching boiling point as providers fall over themselves to cut costs. The obvious winners are UK investors, who are getting passive access to markets at cheaper and cheaper prices. This iShares ETF is one the largest and most commonly held by UK investors and this move will save investors over £12m each year in fees.

“This is a good quality ETF with a long track record. The FTSE 100 remains popular with investors and has an attractive yield of 3.47%. As we approach the end of the current ISA season, it is great that this can be accessed at a super-low ongoing charge. Investors should also consider other UK indices like the FTSE 250 or the FTSE All Share. These include more dynamic medium-sized and smaller companies, which have significantly outperformed the FTSE 100 over the last 15 years.”

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