BlackRock Raises iShares Management Fees by 5%

The MER on many of the popular iShares exchange-traded funds (ETFs) will be going up due to a 5% increase in management fees. This change will affect 29 ETFs. A notable ETF not affected by this change is the S&P/TSX 60 Index Fund (XIU).

The Notice to unitholders goes to a lot of trouble to explain that this is just a change in the way that the GST is handled. BlackRock used to pay the GST out of the management fees collected, but now they won’t. The claim is that “There will be no change to the amount of management fees paid by any iShares Fund.”

Notwithstanding language games, the amount of management fee kept by BlackRock for the affected funds will be going up by 5%. The amount that investors will pay for the combination of management fees and GST will be going up by 5%. There is no getting around the fact that this is a 5% fee increase.

Comments

  1. Michael JamesMay 6, 2010 at 12:09 PM

    @CC: Your theory that BlackRock wants to avoid eating the increase from GST to HST is a good one. A side benefit for BlackRock is the added 5% in management fees.

    I'm almost completely moved over to ETFs now. Fortunately, they aren't all iShares either. However, I'd like to see some competitors to iShares put some pressure on them to prevent future MER increases.

    ReplyDelete
    Replies
    1. Michael JamesOctober 31, 2020 at 8:44 PM

      The comment above is a reply to Canadian Capitalist's comment:

      This was the subject of my post today as well. My theory is that BlackRock is piggybacking on to the upcoming hike in HST to pass along the GST to unitholders as well. I'm so glad that not all my ETF eggs are in the iShares basket.

      Delete
  2. Michael JamesMay 6, 2010 at 2:09 PM

    @Thicken: Don't be sorry -- I'd rather seek truth than wallow in comfortable falsehoods. Rising MERs on ETFs is a real concern. Any time my interests are almost completely opposed to another person's or entity's interests (as is the case between me and BlackRock), I try to be wary.

    ReplyDelete
    Replies
    1. Michael JamesOctober 31, 2020 at 8:44 PM

      The comment above is a reply to Thicken My Wallet's comment:

      It may have been William Bernstein (I can't recall) who sounded the warning bells about a publicly traded company, like Blackrock, owning an ETF issuer. Suddenly, the stakeholder that matters the most is the shareholders and their short-term desire to see rising quarterly earnings, consumer/investor of the products be damned.

      Mutual fund companies have gone down the same road (private issuer being acquired by pubco) and it is now better to own the issuer than the product itself. History doesn't repeat itself but it sure does rhythm.

      Even with more competition, I just don't see fees going down given historical patterns. Sorry to be a downer.

      Delete

Post a Comment

Popular posts from this blog

Short Takes: InvestorLine’s HISAs, 24-Hour Trading, and more

I recently moved some cash into BMO InvestorLine’s high-interest savings accounts (HISAs) that are structured as mutual funds.  Their designations are BMT104, BMT109, and BMT114, and they purportedly pay 4.35% annual interest (which they can change whenever they like).  However, the way they report the monthly interest payments is so baffling that I wasn’t able to sort it out in my first 15 minutes of trying.  A further complication is the following text in the HISA description: “The Bank may pay, monthly or quarterly, compensation to your Dealer at an annual rate of up to 0.25% of the daily closing balance in the BMO HISA.”  I couldn’t find any evidence of such a charge, but I haven’t been invested for a full quarter, and I can’t yet say that such a charge isn’t buried somehow in the confusing reporting.  I have more digging to do before I can recommend these HISAs. Here are some short takes and some weekend reading: Preet Banerjee explains the dangers of Robi...
Read more

My Asset Allocation

I’ve resisted discussing my asset allocation for some time, but now is finally the time to describe it and the reasons behind it. I’m not holding it out as a model portfolio; I believe it’s suitable for me and not necessarily anyone else. With that warning, enjoy the discussion and feel free to ask questions or take some pot-shots. The main reason why I haven’t discussed my asset allocation in detail before now is that I don’t want readers to treat it like a model portfolio and follow it blindly. Everyone’s situation is different. The need for variation in asset allocation from one investor to the next usually isn’t huge, but there is no one-size-fits-all portfolio. A secondary reason for keeping my asset allocation to myself is that I can’t be sure I’ll never change it. For example, I recently made the minor change of switching from an ETF of small-cap stocks to an ETF of small-cap value stocks . I don’t have any plans to change my current allocation, but I may think differe...
Read more

Updated Currency Exchange Method at BMO InvestorLine

There is now a more recent update of the method I use for exchanging currency at BMO OnvestorLine . I recently changed the procedure I use to convert large sums between Canadian and U.S. dollars at BMO InvestorLine. The method I use saves a lot of money compared to using the InvestorLine foreign exchange system. The latest change I made eliminated an annoying interest charge that I had to ask to be reversed. Most people don’t realize how expensive it can be to exchange currency. The extra charge banks and brokerages add gets hidden in the exchange rate. To see this extra charge, start by taking a sum in Canadian dollars, say C$10,000, and finding out how many U.S. dollars you can get. Then see what this U.S. amount would get going back to Canadian dollars. Many people might guess they’d get their original C$10,000 back, but they’d be wrong. In a recent test I did at BMO InvestorLine, I’d get back C$9754, for a loss of C$246 in two currency exchanges. That’s $123 per excha...
Read more

Archive

Show more