BlackRock to Cut ETF Fees on 6 Funds

by Kyle Woodley | October 16, 2012 11:02 am

Fund provider BlackRock (NYSE:BLK[1]) finally announced some long-anticipated fee cuts to its iShares exchange-traded funds on Monday, but they were less than expected, giving a boost to BLK shares Tuesday morning.

The Wall Street Journal reported that BlackRock will cut fees on six ETFs[2] — four stock and two bonds — as part of a movement into a new “Core Series” initiative, meant to help the company better compete against Vanguard and other rivals: The funds currently under that umbrella that will see lower fees:

• iShares Core S&P Total U.S. Stock Market ETF (NYSE:ISI[3])*
• iShares Core S&P 500 ETF (NYSE:IVV[4])
• iShares Core S&P Mid-Cap ETF (NYSE:IJH[5])
• iShares Core S&P Small-Cap ETF (NYSE:IJR[6])
• iShares Core Total U.S. Bond Market ETF (NYSE:AGG[7])
• iShares Core Long-Term U.S. Bond ETF (NYSE:GLJ[8])**

* Will become ITOT      ** Will become ILTB

The company also plans to roll out three international stock ETFs and a bond ETF on Oct. 22:

• iShares Core MSCI Total International Stock ETF (IXUS)
• iShares Core MSCI Emerging Markets ETF (IEMG)
• iShares Core MSCI EAFE ETF (IEFA)
• iShares Core Short-Term U.S. Bond ETF (ISTB)

An analyst at Bernstein Research told Reuters[9] that “The fee cuts will lead to an annual revenue loss of $35 million to $40 million and reduce earnings per share by less than 1 percent,” which was well below estimates, and had investors bidding up BLK shares more than 2% in Tuesday morning trading.

Kyle Woodley[10] is the Assistant Editor of InvestorPlace.com[11]. As of this writing, he did not hold a position in any of the aforementioned securities. Follow him on Twitter at @IPKyleWoodley[12].

Source URL: https://investorplace.com/2012/10/blackrock-to-cut-etf-fees-on-6-funds/

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