Exchange-traded Funds  

Lyxor slashes ETF charges

Lyxor slashes ETF charges

The second biggest provider of exchange-traded funds in Europe, Lyxor, has slashed its fees by a quarter across a range of its products.

The total expense ratio across Lyxor’s 10 world sector ETFs has been cut to 0.3 per cent from 0.4 per cent.

Adam Laird, head of ETF strategy at Lyxor, said the firm keeps its ETFs under constant review as investors increasingly scrutinise their passive choices.

But he pointed out charges are not the only thing Lyxor looks at when reviewing its product range, adding: “We think it’s important investors consider each element of their investments together - including liquidity, precision and performance. 

“But fees are an important factor of investment choice and we want to ensure our ETFs are competitive.”

The asset management industry has been in the regulatory spotlight recently, after the Financial Conduct Authority criticised active funds for having weak price competition, particularly compared to their passive peers.

This is the latest cost-cutting move Lyxor has made so far this year, after it halved charges for two of its European equity ETFs, which now charge 0.15 per cent, while fees for its Russell 2000 ETF have been reduced to 0.19 per cent.

European equity is proving popular at the moment, with more than a third of the €45bn flows into Lyxor’s equity ETFs being allocating to European-focused investments this year. 

Mr Laird said: “We’re optimistic on Europe, but we think investors need to be wary here. There could be pitfalls for markets in the coming months.” 

He pointed to the political events which are looming on the horizon, with the UK election on Thursday, the legislative elections in France next week, Germany’s general election in September, and a potential Italian election at the end of the year. 

“There’s a lot of potential for upset here. Anecdotally, we’ve seen investors being a lot more selective with their Euro equity holdings: looking at individual countries, looking at minimum variance strategies too.”

Andrew Whiteley, director at Provisio Financial Planners, said: "I think these sector funds had always seemed a little expensive compared to say the similar range of 10 sector funds from State Street Global Investors, with the SPDR range priced at 30bps.

"I guess this change makes them at least as attractive as the SPDR range."

katherine.denham@ft.com