Guggenheim slashes fees on smart beta S&P 500 ETF

Jul 5th, 2017 | By | Category: ETF and Index News

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Guggenheim Investments has halved the management fee charged on its largest ETF, the $13 billion Guggenheim S&P 500 Equal Weight ETF (NYSE Arca: RSP), from 0.40% to 0.20% in a bid to position itself as one of the lowest cost providers of smart beta ETF strategies.

Douglas Mangini, senior managing director and head of intermediary distribution, Guggenheim Investments.

Douglas Mangini, senior managing director and head of intermediary distribution, Guggenheim Investments.

“This significant fee reduction is designed to benefit existing shareholders and acknowledge the increasing use of RSP by institutional and individual investors as a core equity holding,” said Douglas Mangini, senior managing director and head of intermediary distribution.

Introduced in 2003, RSP offers investors equal weight exposure to all stocks within the S&P 500 Index, the most widely followed gauge of large-cap US equity performance.

The combination of balanced exposure to all S&P 500 Index stocks with a disciplined quarterly rebalance has led to RSP’s outperformance over the cap-weighted S&P 500 Index since the fund’s inception, returning 11.2% per annum compared to 9.3% for the market cap-weighted index. According to Guggenheim, RSP has outperformed the S&P 500 in 100% of all monthly rolling 10-year time periods.

The fund is of course susceptible to periods of underperformance relative to its market cap-weighted equivalent, having risen 8.3% year-to-date (3 July 2017) compared to 8.5% for the traditional index.

On assets of $13bn, the move to lower fees sees Guggenheim’s income on the fund fall from $52 million to $26m. Market commentators have however hailed the move as a smart tactical play. Guggenheim appears to be launching a pre-emptive strike on any future cannibalization resulting from a soon to be launched equal-weight US large cap ETF, the prospectus of which was filed by Goldman Sachs in April.

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