Management fees of the top five diversified Exchange Traded Product (ETP) managers in Australia fell by an average of 8% in the 12 months to March 2024, according to Rainmaker Information’s latest ETP Report.
Asset-weighted fees are the fees earned on the average dollar invested in a manager’s products.
They fall when investors allocate more funds into lower priced products, or when product fees are reduced by the manager.
“While there was a fair amount of management fee reduction on individual products over this time period, the majority of the fee reduction was simply the result of investors seeking out cheaper options,” according to John Dyall, head of investment research at Rainmaker Information.
BlackRock had the largest decrease in asset-weighted fees, which fell from 0.33% pa to 0.29% pa, for a reduction of 14%.
According to Dyall, this reduction in the asset-weighted fee was purely the result of investors changing their behaviours towards lower cost products.
“The relationship between product fees and the change in the proportion of assets being managed under each product was quite significant,” Dyall said.
“This shows that investors, or at least those investing in BlackRock products, were happier buying cheaper products than more expensive ones.”
“An example of this relationship in action is the iShares S&P 500 ETF. It increased its share of BlackRock assets by two percentage points from 31% to 33%. It also has the lowest management fee of any BlackRock product at 0.04% pa.”
That relationship was not as strong with other managers, in particular VanEck.
“VanEck’s most successful product at the moment is the VanEck MSCI World Ex-Australia Quality ETF,” said Dyall.
“It’s market share of VanEck products increased 28% to 32%. The reason this barely moved the needle on the manager’s asset-weighted fees is that the management fee is currently 0.4% pa, which is pretty much the same as the manager’s asset-weighted fees.”
Largest ETP managers: Change in asset-weight fees, year to 31 March 2024
|
Manager |
FUM (billions) |
12m growth from net flows |
Asset-weighted fees 2023 |
Asset-weighted fees 2024 |
Percentage change |
|
Vanguard |
$55.4 |
12% |
0.17% |
0.16% |
-8.15% |
|
Betashares |
$35.3 |
25% |
0.44% |
0.40% |
-8.39% |
|
BlackRock |
$33.7 |
15% |
0.33% |
0.29% |
-13.73% |
|
VanEck |
$17.6 |
28% |
0.41% |
0.39% |
-5.90% |
|
Global X |
$6.9 |
10% |
0.46% |
0.45% |
-2.43% |
About us:
Originally published at - www.rainmaker.com.au/media-release/asset-weighted-fees-for-etp-managers-fall
About Rainmaker Information
Rainmaker Information, founded in 1992, is a leading Australian-based financial services information publishing house providing marketing intelligence, research, and consulting services on the wealth management industry.
Rainmaker gathers and generates in-depth marketing intelligence with industry research, data, professional development and media capabilities. These resources can be accessed with a subscription to the RainmakerLive terminal.
Rainmaker Information is owned by Institutional Shareholder Services (ISS) and is part of its ISS Market Intelligence business.
About ISS Market Intelligence
ISS Market Intelligence (MI) is a leading global provider of data, analytics, insights, media, and events solutions to the global financial services industry.
ISS MI empowers global asset and wealth management firms, insurance companies, distributors, service providers, and technology firms by providing cutting-edge market-engagement platforms and the actionable intelligence necessary to fully assess their target markets, identify and analyze the best opportunities within those markets, and execute on comprehensive go-to-market initiatives to grow their business.
ISS MI clients benefit from our increasingly connected global ecosystem that leverages a combination of proprietary data, powerful software and analytics, timely and relevant insights, in-depth research, as well as an extensive suite of industry leading media brands that deliver unmatched market connectivity through news and editorial content, events, training, ratings, and awards.
Contact details:
Julian Clarkstone
P. 02 8234 7514
E. [email protected]