Industry Updates

BlackRock slashes fees on two fixed income ETFs as European price war hots up

Tom Eckett

a group of coins

BlackRock has made significant fee reductions on two iShares gilt ETFs as the ongoing fee war seeps into the fixed income space.

The £1.6bn iShares Core UK Gilts UCITS ETF (IGLT) has seen its ongoing charges figure (OCF) slashed to 0.07% from 0.20% and the £903m iShares GBP Index-Linked Gilts UCITS ETF (INXG) has been cut from 0.25% to 0.10%.

The firm said the reason for the cut was to enable investors to have the best tools possible for building blocks as the landscape in Europe shifts from traditional security selection to holistic portfolio construction.

BlackRock said in a statement: “We are seeing greater adoption of indexing to improve cost, risk and time efficiency. Our role is to equip investors with the best tools possible for building efficient and cost-effective portfolios.

“We are focused on using the benefits of our scale to optimise the characteristics we know investors value when choosing ETFs such as liquidity, scale, tracking, breadth of exposure and TER.”

The cuts come at a time when BlackRock is facing fee pressure from rivals, especially in the US, after Vanguard slashed TERs across its core range.

The move is expected to cost the firm around $86m in fee revenue per year with BlackRock having to forgo $100m per annum just to match it, according to ETF Stream calculations.

However, BlackRock is taking on its US rival’s £13.2bn LifeStrategy offering with the launch of a four-strong multi-asset range, MyMap. It is charging five basis points less than Vanguard at just 0.17%.

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