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As a result of the reorganisation, iShares will be closing 15 funds as of October 24th 2013 and harmonising the pricing on 10 funds with identical underlying indices, effective immediately.
The funds earmarked for closure include eight iShares funds and seven legacy Credit Suisse funds. They are being closed principally because of low investor demand.
Of the closures, perhaps most notable is the inclusion of iShares’ entire swap-based commodity line-up, headed up by the iShares S&P GSCI Dynamic Roll Commodity Swap ETF. The closure of these funds reflects iShares stated preference for the direct, physical replication methodology as well as its lack of success at making inroads into the commodity ETP space, which is dominated in Europe by ETF Securities.
Following the Credit Suisse acquisition, ten equity funds from the legacy Credit Suisse ETF range currently offer identical exposures to existing iShares products. To ensure all investors across both fund ranges are treated equally, iShares has adjusted the total expense ratio (TER) to at least the lower of the two funds’ in each instance.
Income accumulating versions of the iShares FTSE 100 UCITS ETF, iShares S&P 500 UCITS ETF and iShares S&P 500-B UCITS ETF have also been repositioned as part of the reorganisation, with their TERs lowered to 15 basis points to meet the growing needs of long-term investors turning to ETFs.
There are no changes to the distributing versions of these funds, which, iShares says, continue to meet the needs of investors who put a premium on greater liquidity and capital markets depth for their shorter-term needs.
The TER reductions have resulted in some significant savings for investors. For example, the fee on the iShares S&P 500 UCITS ETF (Acc) has been reduced by 25 basis points, equivalent to a 63% price cut. On average, the TER reductions equate to 25%.
Commenting on the reorganisation, Joe Linhares, Head of iShares EMEA, said: “We completed the acquisition of Credit Suisse’s ETF business in July, and the ongoing integration process has given us a great opportunity to look across our funds and ensure we’re providing investors with the range and exposures they need today.
“Credit Suisse’s ETF business was highly complementary to iShares’ offering in Europe. The review and streamlining of the product range has resulted in a small number of fund closures. As the largest ETF provider in Europe, with over 250 products, we’re committed to launching new and innovative funds, such as our minimum volatility range, and also to maintaining an efficient and relevant fund offering across the region. Today’s changes mean that where there has been overlap between funds, our investors will benefit from consistent, and in many cases lower TERs as a result of the acquisition.
“Traditional buy-and-hold investors tell us they want access to the broadest market exposure in a way that enables them to keep more of what they earn over long holding periods. They deserve low-cost funds that provide deep access to markets. Accumulating funds also provide greater efficiency for buy and hold investors as they reinvest their dividends in line with the benchmark. By offering a lower expense ratio for our accumulating funds on two of the most in-demand exposures in Europe, giving access to leading UK and US exposures at a lower price, we are providing clients with choice to match their unique investment objectives and strategy.”
Funds closing as of 24 October 2013
iShares MSCI Russia Capped Swap
iShares S&P CNX Nifty India Swap
iShares S&P GSCI Dynamic Roll Commodity Swap
iShares S&P GSCI Dynamic Roll Agriculture Swap
iShares S&P GSCI Dynamic Roll Energy Swap
iShares S&P GSCI Dynamic Roll Industrial Metals Swap
iShares Developed World ex-UK UCITS ETF
iShares MSCI Europe ex-EMU UCITS ETF
iShares CSI 300 UCITS ETF (Swap)
iShares MSCI India UCITS ETF (Swap)
iShares EONIA UCITS ETF (Swap)
iShares MSCI Taiwan UCITS ETF (Swap)
iShares MSCI EM EMEA UCITS ETF (Swap)
iShares FED Funds Effective Rate UCITS ETF (Swap)
iShares Global Alternative Energy UCITS ETF
Funds affected by the TER harmonisation and repositioning
iShares EURO STOXX 50 UCITS ETF (Acc) (Old TER 0.35%, new TER 0.20%)
iShares MSCI Australia UCITS ETF (Old TER 0.59% new TER 0.50%)
iShares MSCI Canada UCITS ETF (Old TER 0.59%, new TER 0.48%)
iShares MSCI Emerging Markets UCITS ETF (Acc) ETF (Old TER 0.75%, new TER 0.68%)
iShares MSCI Europe UCITS ETF (Acc) (Old TER 0.35%, new TER 0.33%)
iShares MSCI Japan UCITS ETF (Acc) (Old TER 0.59%, new TER 0.48%)
iShares MSCI South Africa UCITS ETF (Old TER 0.74%, new TER 0.65%)
iShares MSCI USA UCITS ETF (Old TER 0.40%, new TER 0.33%)
iShares MSCI World UCITS ETF (Acc) (Old TER 0.50%, new TER 0.40%)
iShares FTSE 100 UCITS ETF (Acc) (Old TER 0.33%, new TER 0.15%)
iShares S&P 500 UCITS ETF (Acc) (Old TER 0.40%, new TER 0.15%)
iShares S&P 500 – B UCITS ETF (Acc) (Old TER 0.20%, new TER 0.15%)