Fee War Goes Global as $1.6 Trillion Manager Cuts ETF Costs

(Bloomberg) -- Europe’s biggest money manager is joining the global arms race to offer investors the cheapest exchange-traded funds around.

Paris-based Amundi SA listed nine ETFs this week that charge the equivalent of 50 cents for every $1,000 invested. That’s a mere 10 cents more than Lyxor Asset Management asks for products that set a record low in the region last year, data compiled by Bloomberg show.

It’s a sign that issuers in Europe’s burgeoning ETF market are taking cues from U.S. giants like BlackRock Inc. and Vanguard Group, which have built multi-trillion dollar businesses on the back of cheap indexed funds.

The competition intensified this week as JPMorgan Chase & Co. announced a new stock ETF that charges just 20 cents for every $1,000 of assets and Salt Financial rolled out a fund that will temporarily pay buyers to invest.

“We continue to reduce the cost of all ETFs when it’s possible,’’ Fannie Wurtz, head of Amundi’s ETF, indexing and smart beta business, said in a telephone interview. She said the firm’s size -- it manages 1.4 trillion euros ($1.6 trillion) across active and passive strategies -- gives it the power to create cost-efficient products.

The new Amundi products track Solactive AG indexes and provide physical exposure to stocks and bonds globally, as well as in Europe, the U.S. and Japan.

While Europe’s ETF market continues to play catch-up with the U.S., Citigroup Inc. expects it to almost triple to $2.2 trillion by 2022. The overhaul of market rules known as MiFID II has fueled appetite for the products, according to Wurtz, in part by revealing they’re more actively traded than previously thought.

Asset managers in the U.S. are getting increasingly aggressive on price as they seek to stand out in an ETF marketplace with more than 2,000 options.

“Europe is tracking the U.S. in terms of low fee ETFs,’’ said Andrew Craswell, a senior vice president of investor services at Brown Brothers Harriman & Co. “The European ETF market continues to grow significantly and these low cost products are a reflection of the competitive nature.’’

To contact the reporter on this story: Ksenia Galouchko in London at kgalouchko1@bloomberg.net

To contact the editors responsible for this story: Blaise Robinson at brobinson58@bloomberg.net, Yakob Peterseil, Rachel Evans

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