① Fee cuts have become a common tool for fund companies to seize ETF market share. ② In October alone, many leading institutions such as Huaxia, Bosch, Yinhua, Penghua, and Fuguo joined the “army” of broad-based ETF fee reduction.
Financial Services Association, November 1 (Reporter Shen Shuhong) After several fund companies such as Huaxia, Yinhua, and Penghua announced that their Science and Technology Innovation Board 100 ETF would reduce management fees and custody fees, the “boss” of the Science and Technology Innovation Board 100 ETF, the “boss” of the Science and Technology Innovation Board 100 ETF, and its linked funds were also officially announced, lowering the rate to the lowest level in the market.
Under the fierce competitive pattern of the ETF market, fee reduction has become a tool for fund companies to seize ETF market share. In October, Huaxia Fund successively lowered the management rates of a number of broad-based ETFs, including the Science and Technology Innovation Board 100 ETF, Science Innovation and Entrepreneurship 50 ETF, GEM ETF, etc. Many leading institutions such as Penghua Fund, Yinhua Fund, and Wells Fargo Fund joined the broad-based ETF fee reduction force one after another, lowering the rates for some of its broad-based products to the lowest level in the market.
Science and Technology Innovation Board 100 ETF “Boss” Announces Fee Cuts
Following the official announcement of fee cuts for the BOSHI GEM ETF on October 10, BOSHI Fund issued an announcement on October 30. In order to better meet the investment and financial management needs of investors and reduce investors' financial management costs, the company's three science and technology innovation index funds officially announced fee reductions.
Among them, the annual management fee rate for the BOSHI SCIENCE Science and Technology Innovation Board 100 ETF and its linked fund was reduced from 0.50% to 0.15%, and the annual custodian fee rate was reduced from 0.10% to 0.05%; the annual management fee rate initiated by the BOSHI Shanghai Science and Technology Innovation Board 50 Component Index was reduced from 0.50% to 0.15%, and the annual custodian fee rate was reduced from 0.10% to 0.05%.
Judging from historical performance, the Science Innovation 100 Index and the Science Innovation 50 Index both have the characteristics of high volatility and high elasticity. However, after nearly three years of adjustment, the various broad-based indices are far from historical highs, although the short-term rebound was large. Among them, since the launch of the Bosch Science and Technology Innovation 100 ETF last year, the fund size has maintained an dominant position. Currently, it is 8.3 billion yuan, making it the largest ETF among all ETFs tracking this product.
However, the gap between this scale and the “second-generation” Penghua Penghua Shanghai Science and Technology Innovation Board 100 ETF is less than 1 billion yuan. Recently, on October 28, Penghua Fund announced adjustments to the Penghua Shanghai Science and Technology Innovation Board 100 ETF and its linked fund rates. The annual management fee rate will be reduced from 0.50% to 0.15%, and the annual custodian fee rate will be reduced from 0.10% to 0.05%. The current size of the “Old Three” Huaxia Shanghai Securities Science and Technology Innovation Board 100 ETF is 5.571 billion yuan. The product and its linked fund also officially announced a fee reduction on October 16.
According to Wind data, there are currently 24 themed funds in the market that track the Science and Technology Innovation Board 100 Index (different shares of the same fund, ETF, and linked funds are calculated separately). Judging from the current rate situation, the rate of the Bosch Shanghai Science and Technology Innovation Board 100 ETF and its linked funds after the fee reduction is at the lowest level among such themed funds. The ones that maintain the same level of rates for these two products include the Shanghai Securities Science and Technology Innovation Board 100 ETF and its linked funds under Penghua, Huaxia, and Yifangda. The management fees and custody fees for the Yinhua Shanghai Science and Technology Innovation Board 100 ETF are also 0.15% and 0.05%, respectively, but the management fees and custody rates of the linked fund for this product are still at the level of 0.50% and 0.10%, respectively.
Judging from the current situation, ETF product management fees that track the Shanghai Science and Technology Innovation Board 100 Index are basically divided into two categories: 0.15% and 0.50%, and escrow fees are divided into two categories: 0.15% and 0.5%. In addition, some Science and Technology Innovation Board 100 index increased product management fees by 0.6% or 0.8%, and escrow fees by 0.15%.
The current rate of the Bosch Shanghai Securities Science and Technology Innovation Board 50 Component Index, is also the lowest in the market, another product announced by the BOSHI Fund. Like this product, the management fees and custody fees for the Jingshun Great Wall Science and Technology Innovation Board 50 Component Index, Huaan Shanghai Science and Technology Innovation Board 50 ETF are also only 0.15% and 0.05%, respectively.
Earlier, on October 10, Bosch Fund announced that the annual management fee rate for the Bosch GEM ETF and its linked funds will be adjusted from 0.50% to 0.15%, and the annual custodian fee rate will be adjusted from 0.10% to 0.05%. At the same time, the annual sales service fee rate for the Linked Fund's Class C fund shares will be adjusted from 0.40% to 0.10%.
A number of broad-based ETFs have joined the “fee reduction army”
In recent years, ETFs have become an important investment tool for investors due to the advantages of product risk diversification, low rates, and high transparency. However, under the fierce competition pattern, fee reduction has become an effective tool for many fund companies to “seize scale” and “grab share.”
Take Huaxia Fund as an example. Since October, Huaxia Fund has successively lowered management rates for many broad-based ETFs. In addition to announcing a reduction in the rates of the Huaxia Shanghai Securities Science and Technology Innovation Board 100 ETF and its linked fund in mid-October, the company also announced a reduction in the management rate and custody rate of the Huaxia GEM ETF and its linked fund on October 8. Among them, the management rate was reduced from 0.50% to 0.15%; the escrow rate was reduced from 0.1% to 0.05%.
Also on October 8, Penghua Fund announced that it will reduce the annual management fee rate and custodian annual fee rate of the Penghua Shanghai and Shenzhen 300 ETF Linked Fund to 0.15% and 0.05%, respectively.
On October 19, Yinhua Fund also announced a reduction in the management rate and fund custody rate for the Yinhua Shanghai Securities Science and Technology Innovation Board 100 ETF fund. The annual management fee rate will be reduced from 0.50% to 0.15%, and the annual custodian fee rate will be reduced from 0.10% to 0.05%.
Additionally, Wells Fargo Fund also announced on October 25 that management fees and custody fees for its GEM ETF and its linked funds will be reduced from 0.30% and 0.10% to 0.15% and 0.05%, respectively.
Interestingly, most of the products with adjusted rates mentioned above are not the most managed funds among ETFs that track the same index, and the adjusted rates are all at the lowest level of similar products. From this, we can also see the intention of fund companies to seize market share and catch up with similar products in terms of scale by reducing fees.
Cathay Pacific Fund announced as early as the end of September that the annual management rate for the Cathay Pacific Shanghai and Shenzhen 300 Enhanced Strategy ETF will be reduced from 1.00% to 0.50%.
