Copy-cat ETFs no threat, say fee-based advisors

Copy-cat ETFs no threat, say fee-based advisors

Copy-cat ETFs no threat, say fee-based advisors

A respected industry player has its work cut out for it in wooing savvy clients away from ETFs with lighter-fee mutual funds, argue fee-based advisors.

Investors would rather purchase their own Exchange Traded Funds (ETFs) and pay a fraction more for advisor advice, rather than revert back to an embedded commission-based mutual fund model, suggest some industry veterans.
 
“BlackRock is essentially taking their existing multi-asset class ETFs and building in a trailer fee to improve their market penetration with the advisory community,” says Cynthia Kett of Stewart & Kett Financial Advisors in Toronto. “For investors, it just means more mutual funds to choose from. However, if investors are do-it-yourselfers, they may be better off buying the ETFs themselves and paying separately for the advice.”
 
The BlackRock Strategic Portfolio Series is a suite of seven balanced mutual funds, built with iShares ETFs. Using this platform, the new fund series is designed to provide advisors and investors with alternative investment strategies, according to BlackRock.
 
"This new suite of mutual funds will change the way people think about investing and put the emphasis on the asset allocation mix versus that of single stock or manager selection," said Mary Anne Wiley, managing director, head of iShares, BlackRock Canada, in a news release.
 
According to BlackRock, the new funds are competitively priced with management expense ratios (MERs) ranging from 0.09 - 0.75 per cent, lower than the respective fund’s corresponding category asset-weighted average.
 
Newer “investors will have heard of BlackRock and/or iShares and believe that they’re receiving the ETFs’ diversification and passive investment style at a low cost,” says Kett. “Yes, they’re getting the diversification and passive style, but the costs aren’t necessarily lower.”
 

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