Only a half-dozen of the 13 applicants for a spot bitcoin exchange-traded fund (ETF) have said how much they will charge in management fees, and with expectations that approval could be granted as early as next week, that figure has become tight. Has been to focus on potential investors.
While many factors determine how popular and heavily traded an ETF will be once it hits the market, in this case they will all be holding the same asset – Bitcoin – so details like cost become a key differentiating factor.
“The fees will be significant,” James Seifert, an ETF analyst at Bloomberg Intelligence, said in an email interview. “I don’t think issuers have to offer an absolute minimum fee, but I do think they can’t charge too much and still remain competitive.”
The fee, known as the expense ratio, is used to cover costs such as custodial services, marketing, and even salaries. According to research from Morningstar, the average fee for open-end mutual funds and exchange-traded funds was 0.37% in 2022, which is much lower than 20 years ago, for example, when it was 0.91%.
Invesco and Galaxy set the standard and came up with a “whopper,” as ETF analyst Eric Balchunas puts it described it, saying they would waive fees entirely for the first six months and forgive the first $5 billion of assets. After that they will charge 0.59%.
Fidelity has set the fee at 0.39%, its lowest ever, while Arch and 21Shares as well as Valkyrie plan to charge 0.80%.
“From a pure competitive standpoint, the expense ratio makes a lot of sense in this particular category,” Nate Geraci, written on x, Geraci is president of The ETF Store, an investment advisory firm, and he started a podcast about exchange-traded funds in 2011.
BlackRock, the world’s largest asset manager, has not yet said how much it will charge. When it comes to popularity, this investing giant is likely to be one of the front runners, given its name recognition, track record and hundreds of successful funds.
Seifert estimates BlackRock’s fee is likely to be around Fidelity’s 0.39% number, while Geraci sees it between 0.40% and 0.80%.
“Fidelity potentially has a slight advantage here by being more vertically integrated than anyone else, which may allow them to offer the lowest fees,” Seifert said. Loyalty, unlike others, is Using an Internal Protector And it is in a favorable position given the direct access it has to investors and advisors through its platform, he said.