- Of the dozen or so companies that have applied for Bitcoin ETFs, only six have announced their fee levels.
- Fees will play an important role because all funds hold the same assets.
Of the 13 companies that have applied for Bitcoin (BTC) spot exchange traded funds (ETFs), only half have clearly stated how much their management fees will be. However, potential investors are keeping an eye on the numbers, with some expecting approval as early as next week.
Once an ETF hits the market, a variety of factors will determine how popular and heavily traded it will be, but in this case, all ETFs will hold the same asset: Bitcoin. Therefore, details such as operating costs will become a decisive differentiating factor.
“Fees are going to be important,” James Seyffart, an ETF analyst at Bloomberg Intelligence, said in an email interview. “You don’t have to offer the lowest fees, but if you still want to be competitive, you can’t charge too high a fee,” he says.
The fee, known as the expense ratio, is meant to cover costs such as custodial services, marketing, and even labor costs. According to Morningstar research, the average fee for open-end mutual funds and exchange-traded funds in 2022 will be 0.37%, significantly lower than 20 years ago when it was 0.91%.
Invesco and Galaxy are what ETF analyst Eric Balchunas calls “outrageous.”expressedAs such, it will be completely fee-free for the first six months and the first $5 billion in assets. After that, the fee will be 0.59%.
Fidelity will have the lowest fees at 0.39%, while Ark, 21Shares and Valkyrie will charge 0.80%.
“From a pure competitive standpoint, expense ratios are very important in this particular category,” said Nate Geraci.writing on X. Geraci is president of investment advisory firm The ETF Store and started a podcast about ETFs in 2011.
BlackRock, the world’s largest asset manager, has not yet said how much it will collect. Given its name recognition, track record, and hundreds of successful funds, this investment giant is likely to be one of the front runners when it comes to popularity.
Mr. Seifert expects BlackRock’s fees to be similar to Fidelity’s 0.39%, while Mr. Geraci expects them to be between 0.40% and 0.80%.
“Fidelity has a little bit of an advantage because it’s more vertically integrated than anywhere else, so it might be able to offer the lowest rates,” Seifert said. Unlike other companies, Fidelity employs an in-house custodian, giving it an advantage in having direct access to investors and advisors through its platform.
｜Translation: CoinDesk JAPAN
｜Edited by: Toshihiko Inoue
｜Image: SEC Chairman Gary Gensler (Jesse Hamilton/CoinDesk)
｜Original text: Bitcoin ETF Fees Will Play Critical Role in the Race to Popularity