Lyxor throws down fees gauntlet

Lyxor has announced a new range of ETFs with what it claims are the lowest fees available in Europe in a move which emulates the fee compression taking place in the US market.

Two of the new Lyxor Core range of ETFs come with fees set at just 4 basis points (0.04%) which the company claims is three basis points lower than its nearest competitor.

The 0.04% level is also one basis point lower than the current lowest offering on the market, which according to ETF Stream research in September was the HSBC Euro Stoxx 50 UCITS ETF which has a total expense ratio (TER) of 0.05%.

The two new funds are the Lyxor Core Morningstar UK ETF and the Lyxor Core Morningstar US ETF.

The range extends to 16 funds covering the major equity markets as well as fixed income gilts and TIPS. Four new funds have been created while 12 existing funds have had their fees cut. The four new funds will be launched on the London Stock Exchange tomorrow, 22 March.

Intriguingly, Lyxor says that to aid simplicity and transparency none of the funds will undertake any securities lending.

Arnaud Llinas, head of ETFs and Indexing at Lyxor, said: “Investors tell us they want simple, high quality ETFs at low costs. We’ve launched our Core range to achieve precisely that – cornerstone investments for any portfolio. Lyxor’s mission is to provide quality, innovative investments – our core range is a perfect complement.”

Lyxor said the focus on low fees has come both from the top with regulators expressing a desire for consumers to be offered a cheaper product as well as from the end user themselves who is searching for better value from their investments.

Indicating where the drive for lower fees would have the most impact, Lyxor said the new core range had generated significant initial interest from a range of investors and third-party providers, such as Nutmeg.

James McManus, investment manager at Nutmeg, said: “This type of product innovation is exactly what the ETF industry needs: offering investors a lower cost option without compromising on quality. Lowering costs means investors keep more of their returns and Lyxor are leading the way.”

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