ETF fee competition escalates, and industry transformation faces new challenges
Recent data shows that the average expense rate of new ETFs has risen to 0.63%, a record high since 2010. This trend is mainly affected by spot ETFs involving Bitcoin, reflecting that the fee competition in the ETF industry has reached its limit. Although low fees are good for investors, they are a challenge for issuers.
According to data from Bloomberg Intelligence and the views of industry insiders, about one-third to more than half of US-listed ETFs may not cover their operating costs. This shows that fee competition in the ETF market is evolving into a demand for high-fee, high-profit products. At the same time, the mutual fund industry faces the challenge of continued net closures as investors prefer more cost-effective ETFs.
The mutual fund industry is actively trying to adapt to this change in a variety of ways. However, in the US pension system, mutual funds still have a certain advantage.
In the future, the ETF industry will inevitably need to be more innovative and flexible to attract more investors and maintain the continued growth of the industry. In the future, ETFs will definitely develop in a more formal and larger direction!
