Industry Updates

ETF Wrap: Amundi’s mass fee cut

Amundi joining the fee cut offensive, a tech ETF quadrupling its Nvidia weighting and an ETF with 33ppt tracking difference mad headlines this week

Jamie Gordon

ETF Wrap

This week saw Amundi throw down the gauntlet and become the latest large asset manager to slash fees across its ETF range.

Europe’s second-largest ETF issuer cut fees across 33 ETFs across its core equity, ESG and fixed income suits, including a reduction on the total expense ratio (TER) of the Luxembourg-domiciled Amundi S&P 500 UCITS ETF (SP5) from 0.07% to 0.05%.

Elsewhere, a one basis point (bps) fee cut to 0.06% makes the Amundi US Treasury Bond 1-3Y UCITS ETF (U13G) the lowest TER short-dated US Treasury ETF in Europe.

The $3.1bn Amundi EURO STOXX 50 II UCITS ETF (C50U) also saw its TER slashed from 0.15% to 0.09%, while the $4.5bn Amundi Index MSCI Europe UCITS ETF (CEG2) saw its fee drop to 0.12%.

The move sees the French asset manager return fire at rivals mounting similar offensives in recent months, including fee cuts from BlackRock on 40 ETFs, DWS on 31 ETFs, UBS on 200 ETF share classes and State Street Global Advisors (SSGA) cutting TERs on its range, including taking the $15.6bn SPDR S&P 500 UCITS ETF (SPY5) to 0.03%.

Nvidia weight quadruples in tech ETF

Elsewhere, a rebalance of the $1.5bn SPDR U.S. Technology Select Sector UCITS ETF (SXLK) and its $72bn US-listed counterpart saw its allocations to Nvidia and Apple switch, with the former leapfrogging from a 5% to a 20% weighting, while the latter was cut from 21% to 5%.

SXLK and its US cousin will be forced to sell around $11bn worth of Apple equity and buy $10bn of Nvidia at rebalance.

The underlying S&P Technology Select Sector index will retain Microsoft as its top position.

An ETF with 33ppt tracking difference

ETF Stream highlighted the $94m Xtrackers S&P Select Frontier Swap UCITS ETF (XSFR) has lagged its benchmark – the S&P Select Frontier index – by 33 percentage points (ppts) since launch in 2008.

While the index has risen by a sleepy 20.4% over the 16-year period, the ETF has returned -13.3%, as at 6 June, owing to slippage caused by the cost of maintaining its swaps-based exposure over time and the impact of performance net of fees, with XSFR carrying a TER of 0.95%.

Swaps-based exposures sometimes afford a performance uptick over physical replication in markets with structural anomalies, such as in China A-Shares where there is a lack of physical lending market for overseas investors and US equities where Irish-domiciled synthetic ETFs can benefit from 0% withholding tax on dividends.

ETF Wrap is a weekly digest of the top stories on ETF Stream

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