One of the world's biggest players in the fund management space has announced cuts to some of its ETF range as the market remains fiercely competitive for these products.

BlackRock, the world’s biggest listed asset manager, has cut prices on some of its exchange traded funds and made other changes in an effort to keep a competitive edge in the sector.

The US firm said it has cut the price of two iShares UK equities funds, including its FTSE 100 ETF, the first such investment the firm listed on the London Stock Exchange 15 years ago; it also adjusted its Core series in a bid to make the range more attractive for long-term UK equity investors.
 
BlackRock’s developments come at a time when new research from consultancy ETFGI, as reported elsewhere by this publication today, points to record levels of global assets within ETFs and ETPs. The research shows iShares is dominating the market, having accounted for the largest net inflows in February, attracting $19.9 billion of a total $50.7 billion invested throughout the month.
 
“As the FTSE 100 hits record highs, the price of investing in it is falling. The ETF market throughout Europe is growing hugely, and today’s changes are about ensuring the demand UK investors have for ETFs is met with the right products at the right price," Fergus Slinger, head of UK sales at iShares, said in a statement.

“We launched the iShares Core range for UK investors last June, and it has grown to over $22 billion in nine months. During this time, we got a clear message from UK investors that they wanted to put distributing UK equity ETFs at the heart of their portfolios. We believe ETFs have an important role to play post the Retail Distribution Review and want to confirm our commitment to our clients in this market. We have responded to their needs by adjusting the range and lowering prices,” he continued.

BlackRock has reduced the price of the iShares FTSE 100 UCITS ETF – its largest UK equities ETF with £3.8 billion assets under management - from 40 basis points to 7 basis points. The firm said that the changes reflect an increased propensity amongst UK investors to favour distributing rather than income accumulating funds for their UK equity holdings.

The business also dropped the price of the accumulating iShares Core FTSE 100 UCITS ETF from 10 basis points to 7 basis points. It claims that the changes, which will see the cost for every £100 invested in the funds reduce from 40 and 10 pence respectively to 7 pence, will make them the UK’s lowest priced FTSE 100 ETFs. The firm is also equalising the fee level on both funds.
 
BlackRock has adjusted its iShares Core series for UK clients, incorporating the distributing FTSE 100 ETF in place of the accumulating fund. The series has gathered $11.4 billion in net inflows since it launched in June 2014 – half of iShares’ total inflows within the EMEA fund range over that period.
 
“As UK ETFs turn 15, we are providing a more cost-effective way to invest in domestic equities through ETFs than ever before. With these changes today we now have the most competitive FTSE funds in the market,” Slinger said.
 
ETFs are typically open-ended, index-based funds, with active ETFs accounting for less than 1 per cent market share. They can be bought and sold like ordinary shares on a stock exchange and offer broad exposure across developed, emerging and frontier markets, equities, fixed income and commodities.

(Editor's note: BlackRock remains probably the biggest and most visible of the ETF brands but, as this story shows, the battle to remain competitive is fierce with these "beta" products.)