This past Tuesday, the net expense ratio on the GlobalShares FTSE Emerging Markets Fund (GSR) was reduced from 0.35% to 0.25%, making it the cheapest Emerging Market ETF. Their fees are now less than Vanguard’s Emerging Market ETF (VWO), which has an expense ratio of 0.27%. Their price reduction further widened the gap between Old Mutual’s fund and the iShares MSCI Emerging Markets Index Fund (EEM), which has an expense ratio of 0.72%.

Cinthia Murphy, writing for Index Universe, quotes Old Mutual CEO Tendai Musikavanhu as saying, “When it comes to ETFs, it’s critical to have a low cost and a low tracking error. We are offering investors added value by cutting the total expense ratio. But we will also work to have a very low tracking error.”

“A spokeswoman for BlackRock (BLK) says the firm has no plans to change EEM’s pricing. Vanguard says its strategy does not include “temporary fee waivers.” Writes  Elizabeth Trotta for SmartMoney.

“The number of ETFs has grown so large that firms are now more apt to differentiate themselves using price, says Loren Fox, senior research analyst at investment industry research firm Strategic Insight. Although industry watchers anticipate more competitive pricing, the major players say they have no plans to respond to the latest cut.  Fox says investors should also remember that a low expense ratio has little to do with an ETF’s total net return. Investors may spend less to own the fund, but their long-term returns hinge on the performance of the ETF itself.” Writes  Elizabeth Trotta for SmartMoney.

Related posts:

1. iShares Announces Launch of Emerging Markets Small Cap Fund (EEMS)
2. Trading The Globe: Fund Flows Signal An Emerging Markets “BUY” (EEM, EZA, TUR, EWW, CHL, TSM)
3. iShares To Begin Trading The iShares MSCI Emerging Markets Small Cap Index Fund ETF Index Fund ETF (EEMS) Thursday, August 18th
4. iShares Launches Emerging Markets Local Currency Bond Fund (LEMB)

NYSE:EEM, NYSE:GSR, VWO