Investments  

iShares cuts fees on FTSE 100 ETFs to 7 basis points

iShares cuts fees on FTSE 100 ETFs to 7 basis points

iShares has cut the fee on its two FTSE 100 exchange traded funds (ETFs) to 7 basis points.

The distributing version of the iShares FTSE 100 UCITS ETF had previously had a much higher fee of 40 basis points than the accumulating version at 10 basis points, in spite of the former being the largest listed UK equities ETF.

But the fee on both FTSE 100 ETFs has now been reduced to the same level.

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The difference between the two ETFs is that the distributing version pays out the dividends from FTSE 100 companies, the accumulating version retains and reinvests those dividends.

The firm has also removed the accumulating version of the FTSE 100 ETF from its Core range of ETF products and replaced it with the distributing version.

Fergus Slinger, head of UK sales at iShares, said the firm had made the change to the Core range because investors had told iShares they “wanted to put distributing UK equity ETFs at the heart of their portfolios”.

Ben Seager-Scott, director of investment strategy at TilneyBestinvest, said he and many of his peers had engaged with iShares about the 40 basis point ETF for some time and he welcomed the reduction to 7 basis points.

He said: “This move is very positive and makes it very competitive with peers in terms of total expense ratio (TER) and has attractive liquidity.”

Mr Seager-Scott said ETFs tracking major indices should have a TER of below 10 basis points and “anything above that is effectively a no go area”.

Although iShares has lowered the fees on its UK trackers, the firm still has an S&P 500 ETF that also charges 40 basis points.

Mr Seager-Scott said he hoped to see more movement on fees from iShares on other products in the future.