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BlackRock Cuts Fees on World’s Biggest Bond ETF and More

(Bloomberg) — BlackRock Inc. has just cut costs across a handful of ETFs — including the biggest bond fund in the industry — as big issuers ramp up the famous fee war across the $7 trillion U.S. marketplace. 

In Securities and Exchange Commission filings Thursday after the market close, the world’s largest issuer of exchange-traded funds reduced the expense ratio on the $85 billion iShares Core U.S. Aggregate Bond ETF (ticker AGG) to 0.03% from 0.04%. 

It also took an ax to expenses on two stock ETFs, previously known as the $1.26 billion iShares MSCI USA Multifactor ETF (ticker LRGF) and the $911 million iShares MSCI International Multifactor ETF (ticker INTF). It cut fees on the former to 0.08% from 0.2%, and to 0.15% for INTF, from 0.3%.

In a separate fund filing, BlackRock said it will be changing the current fund names and the current underlying indexes for both. LRGF will be known as the iShares U.S. Equity Factor ETF, and INTF will be renamed the iShares International Equity Factor ETF. The funds will track indices from STOXX instead of MSCI. 

“Fees continue to move lower,” said Todd Rosenbluth, head of research at ETF Trends. “Advisors and retail investors are fee-conscious when using building block, data-oriented or broad-market products — and lower fee products tend to garner more attention.”

BlackRock reduced charges on two of its fixed-income ETFs in January, following fresh moves from State Street Corp. and Vanguard Group Inc. late last year. 

Although BlackRock has enjoyed the largest assets under management in the U.S. ETF space for years, Vanguard Group is quickly catching up. Investors added more money to Vanguard ETFs than to any other U.S. sponsor in the first quarter, with net inflows of $77.4 billion. Investors have pulled $963 million from the AGG in 2022, while Vanguard’s $83 billion Total Bond Market ETF (ticker BND) has raked in roughly $4.4 billion.

“BlackRock makes enhancements to iShares ETFs as part of an ongoing review of its product lineup to both meet and anticipate the needs of our clients,” said a spokesperson for BlackRock.

BlackRock also cut expense ratios for several other funds.

  • $3.7 billion iShares Core International Aggregate Bond ETF (ticker IAGG) to 0.07% from 0.08%
  • $31 billion iShares Core MSCI Total International Stock ETF (ticker IXUS) to 0.07% from 0.09%
  • $74 billion iShares Core MSCI Emerging Markets ETF (ticker IEMG) to 0.09% from 0.11%
  • $7 billion iShares Core MSCI International Developed Markets ETF (ticker IDEV) to 0.04% from 0.05%

–With assistance from Vildana Hajric.

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