Van Eck announced today plans to reduce the expense caps on three of its international equity ETFs, effective immediately. The three ETFs that will be impacted include:
- Market Vectors Brazil Small-Cap ETF (BRF): The expense cap on BRF, which offers exposure to small cap Brazilian equities, will be lowered from 0.71% to 0.65%. BRF was one of the most successful new ETF launches of 2009, growing to almost $700 million in assets between its launch in May and the end of the year (see this Guide To Small Cap International ETF Investing). Despite its impressive start, BRF is still much smaller than the iShares MSCI Brazil Index Fund (EWZ), which has assets of approximately $9 billion. EWZ charges an expense ratio of 0.63%.
- Market Vectors Poland ETF (PLND): This ETF was the first to offer pure play exposure to Poland’s equity markets, but now faces competition from the recently-launched iShares MSCI Poland Investable Market Index Fund (EPOL). The new iShares ETF has come flying out of the gates, racking up more than $40 million in assets in its first few weeks. PLND’s expense cap drops from 0.76% to 0.65%, equivalent to the fee charged by EPOL.
- Market Vectors Vietnam ETF (VNM): Van Eck is also slashing the expense ratio on its Vietnam ETF from 0.97% to 0.76%, a significant reduction to the only ETF focusing on Vietnam equities. VNM has been a hit with investors; current assets are now at about $135 million.
The caps will be lowered temporarily until at least May 1, 2011. “International funds generally have higher net expense ratios than domestic funds but we try to pass on lower expenses to shareholders when we achieve economies of scale,” said Jan van Eck, Principal at Van Eck Global in a press release.
ETF expense ratios have been in focus in recent months, most notably as the industry has observed the battle between the iShares MSCI Emerging Markets Index Fund (EEM) and Vanguard Emerging Markets ETF (VWO). Both products track the MSCI Emerging Markets Index, and the iShares fund has historically been the largest player in the space. But thanks in large part to a more competitive expense ratio, VWO has gained ground over the last year (see Five Head-To-Head ETF Matchups To Keep An Eye On).
Disclosure: Long BRF.