Lyxor has cut charges on three European equity exchange traded funds (ETFs) by more than half to undercut the competition in a heated passive price war. As of 12 June the cost of Lyxor Euro Stoxx 50 UCITS ETF (MSED), Lyxor Euro Stoxx 300 UCITS ETF (MFDD) and Lyxor Stoxx Europe 600 UCITS ETF (MEUD) has fallen from 0.15 per cent to 0.07 per cent. This is the second time in under one year that Lyxor has halved the cost of two of these European ETFs. Earlier this year it reduced the fees on Lyxor Stoxx Europe 600 and Lyxor Euro Stoxx 300 from 0.30 per cent to 0.15 per cent.
Lyxor is the only ETF provider that offers a Euro Stoxx 300 ETF that tracks the performance of 300 Eurozone companies. And Lyxor Stoxx Europe 600 has become the cheapest fund tracking this index, which includes companies outside the euro area. Source Stoxx Europe 600 UCITS ETF (S600), by contrast, has an ongoing charge of 0.19 per cent.
But Lyxor is still not as cheap as HSBC when it comes to the popular Euro Stoxx 50 index, which comprises the 50 largest blue-chip eurozone companies - HSBC Euro Stoxx 50 UCITS ETF (H50E) has an ongoing charge of 0.05 per cent. The next cheapest products are db X-trackers Euro Stoxx 50 UCITS ETF (XESC) and iShares Core Euro Stoxx 50 UCITS ETF (CS51) with ongoing charges of 0.09 per cent and 0.10 per cent, respectively.
Lyxor is not alone in cutting the cost of its European ETFs this year. In May 2017 the cost of iShares Euro Stoxx 50 UCITS ETF (EUE) was halved to 0.16 per cent. Just one month earlier, db X-trackers MSCI Europe Index UCITS ETF (XMEU), db X-trackers MSCI Europe Mid Cap Index UCITs ETF (XEUM) and db X-trackers MSCI Europe Small Cap Index UCITS ETF (XXSC) had their charges cut to between 0.25 per cent and 0.30 per cent.
The price cuts come amid growing investor demand for Europe ETFs. Lyxor says that more than €3.4bn (£2.99bn) flowed into European equity ETFs in May - the highest volume since December 2015 - following evidence that companies and conditions in the eurozone are strengthening. And European equity open-ended funds, investment trusts and ETFs were among the strongest performers among these types of fund in May.
Last week Lyxor also cut the ongoing charge of 10 global sector ETFs from 0.40 per cent to 0.30 per cent. These included Lyxor MSCI World Consumer Discretionary UCITS ETF (DISG), Lyxor MSCI World Consumer Staples UCITS ETF (STAG) and Lyxor MSCI World Health Care UCITS ETF (HLTG).
In 2016 Lyxor also dramatically undercut its rivals by reducing the charges of five fixed income ETFs to just 0.07 per cent and two to 0.09 per cent, in some cases a cut of two-thirds. It remains by far the cheapest ETF provider for broad bond ETFs, which are increasingly popular with investors seeking a lower-cost route into the expensive bond market.
The rapid-fire fee reductions, which have been mirrored by cuts from Source and UBS, are evidence of an increasingly competitive ETF market. Providers have been jostling for position by launching core product ranges, such as Deutsche Asset Management's and iShares' low-cost building block ranges, and reducing fees on popular indices.
This month Deutsche Asset Management will add to its core range with the launch of an ETF tracking the MSCI Emerging Markets. The ETF will have an ongoing charge of 0.20 per cent and use physical replication.
Lyxor ETFs which have recently cut their charges
| Lyxor Stoxx Europe 600 (MEUD) |
| Lyxor Euro Stoxx 300 UCITS ETF (MFDD) |
| Lyxor Euro Stoxx 50 UCITS ETF (MSED) |
| Lyxor MSCI World Consumer Discretionary UCITS ETF (DISW) |
| Lyxor MSCI World Consumer Staples UCITS ETF (STAG) |
| Lyxor MSCI World Energy UCITS ETF (NRGG) |
| Lyxor MSCI World Financials UCITS ETF (FINW) |
| Lyxor MSCI World Health Care UCITS ETF (LHLTG) |
| Lyxor MSCI World Industrials UCITS ETF (INDW) |
| Lyxor MSCI World Information Technology UCITS ETF (TNOW) |
| Lyxor MSCI World Materials UCITS ETF (MATW) |
| Lyxor MSCI World Telecommunication Services UCITS ETF (TELW) |
| Lyxor MSCI World Utilities UCITS ETF (UTIW) |
Source: Lyxor and Investors Chronicle
