Prices are rising on all types of goods and services across the US. Yet even with retail market participation at all-time highs, fee competition among asset managers and ETF sponsors - which has always been particularly fierce - is heating up once again. The biggest ETF providers like BlackRock and State Street already charge fractions of a penny on the dollar for some of the most popular ETFs (which enjoy AUMs in the hundreds of billions of dollars), so how much lower can the bar go?
Well, Bloomberg reported Friday that Atlanta-based Invesco is launching two new ETFs that will have all management fees waived for the rest of the year, further aggravating the industry's price war. The funds are focused on two of speculators' favorite industries: biotechnology and semiconductors. Even after the end of the year, investors will only need to pay 19 basis points.
The Invesco Nasdaq Biotechnology ETF (IBBQ) and Invesco PHLX Semiconductor ETF (SOXQ) will effectively cost nothing until Dec. 17, after which each will carry an expense ratio of 19 basis points, according to a press release from the firm.
Competition across the fund industry has been heating up this year, with BlackRock and State Street both slashing fees. Still, zero-fee offerings are relatively uncommon.
BNY Mellon Investment Management released the first zero-fee bond fund last year as well as another zero-fee product tracking big American companies. But so far no other large asset managers have made comparable moves.
In total, Invesco has about $340 billion under management for its ETF business, comprising roughly 5.5% of the total US market, according to Bloomberg data.
According to the prospectus, IBBQ will provide exposure to some 270 biotechnology companies, including some that were involved in producing COVID vaccines and treatments. This week has already been a big one for the biotech industry, after Biogen secured approval for a controversial Alzheimer's treatment, the first of its kind (thought some critics question its efficacy). Meanwhile, SOXQ will include 30 semiconductor firms.
With Robinhood set to go public this summer, investors will be paying closer attention to the ETFs that are increasingly popular among America's growing army of retail speculators.