With nearly nine months in the books, 2010 is shaping up to be the year of price wars in the ETF industry. In the past several months, a number of big names have slashed expense ratios on some of their most popular products, in an effort to attract cost-conscious investors. Charles Schwab and Vanguard have gone back and forth in cutting prices on popular broad-based funds, while iShares recently made a splash in the precious metals space by lowering the expense ratio on its gold fund from 40 basis points to 0.25%. Smaller ETF shops have added downward pressure to ETF costs, with Van Eck and GlobalShares among those reducing expense ratios in recent months. Now add First Trust to that list; the Lisle, Illinois-based firm recently announced that it too would be cutting the expense ratio on one of its emerging market ETFs [see ETF Price Wars Escalate].
On October 1st, First Trust will reduce the expense ratio of BICK Index Fund (BICK) by 6 basis points. This reduction amounts to about 8.5% of the current price of 70 basis points, and will bring BICK below the average expense ratio within the Emerging Markets ETFdb Category.
BICK Index Fund (BICK)
This ETF seeks to replicate the performance of the ISE BICK Index, which is designed to track the largest and most liquid public companies that are domiciled in Brazil, India, Mainland China and South Korea. BICK offers a twist on the popular BRIC bloc of countries, but replaces exposure to the commodity-intensive Russian economy with an allocation to the quasi-developed technology powerhouse in South Korea [see First Trust's Twist On The BRIC]. The fund’s assets focus on the financials (22.4%) and industrial materials (15.3%) sectors of the market. From a country standpoint, this ETF does well to allocate its assets evenly among the BICK nations, giving approximately equal exposure to each of the four emerging markets. BICK, which is roughly 6 months old, has gained almost 4% since inception [see BICK's fundamentals here].
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Disclosure: No positions at time of writing.