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iShares axes 15 funds and cuts fees
23 September 2013
Part of a review following the firm's acquistion of Credit Suisse
iShares is to close 15 funds and cut fees among several others as part of a review of its activities, following the acquisition of Credit Suisse's exchange traded fund (ETF) business earlier this year.
The firm said it would close several equity and commodity ETFs where low investor demand meant they were no longer viable. As a result of combining both the iShares and Credit Suisse ETF ranges, the firm was left with several duplicate funds, and will harmonise prices between them.
The accumulating versions of the iShares FTSE 100 Ucits ETF, iShares S&P 500 UCITS ETF and the iShares S&P 500 – B Ucits ETF have also has their costs cut to 15bp on a total expense ratio (TER) basis.
Joe Linhares, head of iShares Emea, said: “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.
"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.”
iShares also announced the launch of new corporate bond ETFs in the UK, with the listing on the LSE of the the iShares $ Corporate Bond Interest Rate Hedged Ucits ETF and iShares £ Corporate Bond Interest Rate Hedged Ucits ETF. The two funds are designed to give investors physically-backed exposure to corporate bonds, while mitigating interest rate risk.
Tom Fekete, head of product development for iShares in Emea, said: “Investors remain interested in high quality corporate bonds as fundamentals are supportive and yields start to look more interesting. However, corporate bond investors take on the risk that the value of their bonds will fall as yields rise.
“The new funds aim to mitigate interest rate risk and enable investors to access the performance of corporate bonds in a single cost-efficient trade. We hope to expand this product suite further to give investors more choice in the way they manage interest rate risk and to meet the significant long-term demand for fixed income ETFs.”
The two funds are designed to mitigate interest rate risk from volatility in government bond prices by selling sovereign debt futures and targeting a duration of zero.