1) iShares Files for the U.S. Infrastructure ETF SEC Filings | 11/29/2017
Because… There are just eight ETFs in Morningstar’s Infrastructure category, seven of which invest in infrastructure stocks around the world. The new fund will be the second U.S.-focused infrastructure ETF. Global X brought U.S. Infrastructure Development ETF (PAVE) to the market on March 6, 2017. Since PAVE has $20.4 million of assets, it would not be too hard for the iShares fund to play catch-up. iShares Global Infrastructure ETF, with assets of $1.9 billion, is the largest in the category. The filing did not disclose the fund’s expense ratio, but the new iShares fund could become a leader when more ETF providers target the U.S. Infrastructure space.
2) Schwab Expands Index Mutual Fund Lineup Schwab | 12/1/2017
Because… Schwab already offers U.S. Large-Cap Growth ETF, U.S. Large-Cap Value ETF, and U.S. Mid-Cap ETF with the same expense ratios. These three ETFs each have approximately $4 to $5 billion in assets with combined net inflows of $1.7 billion during the first three quarters of the year. Since the new index mutual funds will waive expense ratios until June 30, 2018, investors can get in for free. The fee waiver may attract cost-conscious investors and give the fund assets a jump-start. It will be interesting to see if the introduction of the mutual funds will cannibalize flows into those ETFs with the same market exposure.
3) Expense Ratio Ranks as Top ETF Selection Criteria for the First Time in 5th Annual Brown Brothers Harriman and ETF.com Survey Brown Brothers Harriman | 12/1/2017
Because… The BBH and ETF.com survey shows that nearly two-thirds (64%) of advisors and institutional investors ranked expense ratio as “very important” when selecting ETFs. The ranking improved from #2 in 2014-2016 and #3 in 2013. This finding explains why ETF managers are scrambling to slash fees for existing funds or introduce funds with very low expense ratios. The price competition started from industry leaders in the market cap-weighted ETF space. It expanded to the smart beta arena when Goldman Sachs launched ActiveBeta U.S. Large Cap Equity ETF with an expense ratio of 0.09%. Now that Vanguard filed for six actively managed factor-based ETFs with extremely low fees, active ETF managers will feel the downward price pressure as well.