Barron's Says BlackRock-Vanguard Fee War May Escalate
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Monday, September 10, 2012

Barron's Says BlackRock-Vanguard Fee War May Escalate

The biggest providers of exchange-traded funds, BlackRock [profile] and Vanguard Group [profile], should be bracing for the next fee battle, according to Barron's.

Barron's says Vanguard cut its already very low fees on some funds in the spring. It lowered the cost of popular funds like the Vanguard Dividend Appreciation Index ETF, which dropped to 13 basis points from 18 basis points, and the Vanguard 500 Index Fund, cut to a microscopic 5 BPS. That leaves industry leader BlackRock ripe for fee-cutting, the paper argues.

BlackRock, according to Barron's, has hinted that change is afoot, but it has given little indication what, if anything, will happen with fees.

Asset flows illustrate the pressure BlackRock faces. Vanguard has enjoyed an industry-leading $37.8 billion in global net inflows for the year through August, edging out $35.3 billion at BlackRock's iShares unit, according to data from research firm ETFGI. The figures are striking in light of BlackRock's dominance: iShares still lays claim to more than 40 percent of the $1.2 trillion industry's assets, or more than twice Vanguard's 18 percent.

The full story can be read on the Barron's website.

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