Contrary to press reports published over the past two days,
) iShares unit, the world's largest ETF sponsor, will not raise
fees on 40 of its
tracking global markets. Initial
reports said iShares would raise fees
on some of its most popular global ETFs, including the iShares MSCI
Emerging Markets Index Fund (NYSE:
). EEM is the second-largest emerging markets ETF by assets.
In a New Year's Eve interview with Benzinga, a BlackRock
spokeswoman explained that all mutual fund and ETF sponsors are
required by the Securities and Exchange Commission to submit
filings within 120 days after the end of their fiscal years. The
fiscal year for the 40 iShares funds ended August 31.
Those filings outline the actual fees incurred as a percentage
of net assets during the funds' fiscal year. These fees do not
reflect what investors may have paid and current fees. Expense
ratios could increase if certain assets under management thresholds
are not met. In the case of iShares, the firm's board of directors
previously instituted breakeven points on various ETFs that would
trigger fee increases or reductions when certain AUM totals are
reached. Importantly, iShares notes that those breakeven points are
applied to a group of funds and it takes a group to reach certain
AUM levels for new expenses to be triggered.
For example, and it should be emphasized that this is a
theoretical example, if investors pulled massive sums of capital
from ETFs such as the iShares MSCI France Index Fund (NYSE:
), the iShares MSCI Italy Index Fund (NYSE:
), the iShares MSCI Spain Index Fund (NYSE:
) and several other iShares Europe-focused ETFs, fee increases
could be triggered.
However, the SEC filings do not acknowledge asset growth or
shrinkage in ETFs after August 31 until the filing for the next
fiscal year is made.
One example of an iShares ETF that is not seeing its fees
increase, but has been home to stellar asset growth that is not
readily acknowledged in regulatory filings is the iShares MSCI
Philippines Investable Market Index Fund (NYSE:
). EPHE had
$142.2 million in AUM in July
only to see that number jump to $171.5 million in late
As of December 31, EPHE has $218. 4 million in AUM,
according to iShares data
. The ETF's fee's will remain 0.59 percent per year.
Another example is the iShares MSCI Turkey Investable Market
Index Fund (NYSE:
). That ETF had
$665 million in AUM as of early December
, but finished the year with almost $768 million in assets. That
surge in AUM would not be reflected in SEC filings, but TUR's fees
will remain unchanged at 0.59 percent
Bottom line: BlackRock has confirmed that it is not raising fees
on any of its ETFs. The firm also confirmed it will not be lowering
fees on the iShares MSCI Global Minimum Volatility Index Fund
), the iShares MSCI Emerging Markets Consumer Discretionary Fund
) or the iShares MSCI Emerging Markets Energy Capped Fund (NYSE:
) as was previously reported.
For more on ETFs, click
(c) 2013 Benzinga.com. Benzinga does not provide investment advice.
All rights reserved.
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