ETF fees: How low can they go?

A major player in the Canadian ETF industry has thrown down the gauntlet when it comes to investors accessing the U.S. market putting active mutual funds on notice

iShares’ announced Tuesday that it’s lowering the annual management fees of the iShares Core S&P U.S. Total Market Index ETF (XUU) and iShares Core S&P U.S. Total Market Index ETF (CAD-Hedged) (XUH) to 0.07% making the duo of funds the cheapest and easiest way for investors to access the U.S. Total Stock Market in Canada.
“As the world’s largest economy, we know the U.S. market often holds an important role in an investors’ portfolio,” said Warren Collier, Managing Director, Head of iShares, BlackRock Canada. “As part of our mandate to deliver easy-to-access, well-diversified, and cost effective solutions through our iShares Core funds, these product enhancements are another step towards delivering on that goal.”
Less than a year old having been introduced in February 2015 as an additional part of iShares’ core platform of ETFs, XUU and XUH provide investors with exposure to over 3,700 individual securities, tracking the broadest U.S. market coverage index in Canada.
“With the iShares Core, we’ve had tremendous success in delivering low-cost investment solutions to the long-term, buy-and-hold investor,” said Collier. “Through our global iShares Core platform, we are able to further deliver on this, by leveraging the breadth and depth of the global offering to the Canadian investor, in a cost effective manner.”
Since iShares introduced its core platform in March 2014 it has captured 32% of flows across their respective asset classes which includes Canadian equities, dividends and bonds, as well as U.S. and international equities.
Globally, the iShares core platform has amassed US $231bn in AUM.
“While the ETF universe continues to evolve, the iShares Core continues to make it easy for investors to access and identify their core portfolio holdings,” said Collier. “Today’s evolution, is part of our effort to ensure we are adapting to the market, and providing Canadians investors with competitively-priced, well diversified ETF solutions.”