BlackRock wades into ETF price war as popularity soars

LONDON Mon Jun 2, 2014 3:04pm BST

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LONDON (Reuters) - BlackRock, the world's biggest asset manager, slashed the prices of some of its exchange traded funds (ETFs) on Monday to compete in a European price war as the products become increasingly popular with retail investors in the region.

BlackRock, which manages over $4.4 trillion in assets, launched a package of 14 ETFs in Europe on Monday, cutting the price of six in the range by as much as 58 percent.

ETFs are growing in popularity among retail investors as a low-cost alternative to active fund management, and because they trade like shares on an exchange which makes them easy to access. The European market for ETFs has grown 23 percent a year for the last five years, BlackRock said.

Its move follows similar ones earlier in the year by other big European providers such as Deutsche Asset & Wealth Management and Amundi to cut ETF prices.

BlackRock's ETF arm iShares manages some $211 billion of assets, making it the biggest ETF provider in Europe, with almost half the total market share. The company has cut the price on its S&P 500-tracking ETF from 15 basis points to seven - two below low-cost rival Vanguard's.

"ETFs are coming of age in Europe," said Rachel Lord, head of BlackRock's ETF divison, iShares, for Europe, the Middle East and Africa. "What started as a tool for institutions has now been adopted by a broad spectrum of investors."

Lord added that the range of funds was aimed at retail investors who were "looking to increasingly position ETFs as their vehicle of choice for passive investing".

(Reporting By Jemima Kelly; Editing by Sophie Walker)

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