The ETF world is becoming increasingly dynamic. While some issuers are lining up with new products to attract investors and increase their asset base, several others are reducing fees on their products to get more competitive.
This in-fighting among issuers has been great news for investors who can choose the cheapest product from a plethora of funds available in the market.
While there are a number of factors to consider (including the index tracked by the fund, issuer and assets under management, and diversification which investors should look into before investing in ETFs), cost is an important factor that cannot be ignored. This is especially true when two funds track similar, or even identical, indexes, thereby making the cheaper fund more attractive.
In a recent press release, US Commodity Funds (USCF) revealed that it has slashed fees on four of its products, thereby cutting down costs for those investors holding these funds. The cut takes a cue from the latest fee reductions by Vanguard, which has slashed fees for five of its international stock ETFs (read:Vanguard Slashes Fees for 5 ETFs Including VWO).
United States Commodity Index Fund (NYSEARCA:USCI), United States Copper Index ETF (NYSEARCA:CPER), United States Agriculture Index Fund (NYSEARCA:USAG) and United States Metals Index Fund (NYSEARCA:USMI) are the four products which have seen a cut in their expense ratios. While the cut will probably hit the issuer’s bottom line in the near term, it could result in an increase in assets overall for the long haul.
“These funds were designed with the buy-and-hold investor in mind, and we want to demonstrate that we also view these as long-term investments.” John Hyland, USCF’s Chief Investment Officer, said in the press release. “We believe this will be an effective longer-term strategy to continue to grow our assets.”