Source’s launch of 13 new funds last week marked the arrival of a major new issuer in the European exchange-traded products market.
The launch of an ETF “platform”, with backing from several financial institutions, was a topic that we covered in a recent feature. But Source’s pricing policy went against the grain of recent competitor launches, which have been characterised by falling fund fees. Is this a sign that a long-standing trend towards cheaper management charges is about to change? And what should one make of the issuer’s decision to list funds on a single European exchange, the Deutsche Boerse, rather than cross-listing its ETFs in different European countries?
In a recent blog we highlighted some recent research from Debbie Fuhr’s team at Barclays Global Investors, which showed that European ETF average fee levels had converged with those in the US, at 31 basis points per annum.
There are still some differences between the two markets—to give two examples, Europe still cannot match the ultra-low fees on offer from US large-cap equity ETFs, which average 12 basis points, while the more institutional investor base in Europe means that there is no real equivalent to the multi-billion US leveraged and inverse leveraged funds sector, which is popular with retail investors, and where the typical fee is 95 basis points.
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