Van Eck has become the latest ETF issuer to announce ETF fee reductions, lowering the expense ratios on two of its country-specific international ETFs. Effective January 26, the expense cap on the Market Vectors Indonesia Index ETF (IDX) was lowered from 0.68% to 0.60%. The expense cap on the Market Vectors Poland Index ETF (PLND) was lowered from 0.65% to 0.60%. The expense reductions will remain in place until at least May 1, 2012. “International funds generally have higher net expense ratios than domestic funds but we try to pass on lower expenses to shareholders as we achieve economies of scale,” said Jan van Eck, Principal at Van Eck
Van Eck was the first issuer to introduce “pure play” ETFs focusing on the economies of Indonesia and Poland. But in the last year, iShares has launched direct competitors to these products; the MSCI Indonesia Investable Market Index Fund (EIDO) and MSCI Poland Investable Market Index Fund (EPOL) both began trading in May 2010. With more than $600 million in assets at the end of 2010, IDX has remained the preferred choice for exposure to Indonesia (EIDO finished the year with about $300 million). But the iShares Poland ETF already dwarfs PLND in terms of assets (PLND finished last year with about $53 million, compared to $100 million for EPOL).
EIDO and PLND both charge expense ratios of 0.61%, meaning that as a result of the recent shift the Van Eck products will be cheaper than their closest competitors [try the ETF Country Exposure Tool to see all ETFs with exposure to these markets].
This marks the second time that Van Eck has cut expenses on PLND; last June it reduced the expense ratio from 0.76% to 0.65%. At that time Van Eck also lowered fees on its Brazil Small Cap ETF (BRF; from 0.71% to 0.65%) and Vietnam ETF (VNM; from 0.97% to 0.76%). Several issuers have lowered expenses over the last year, with the iShares COMEX Gold Trust (IAU) perhaps being the most visible example. IAU charges 0.25%, 15 basis points less than the Gold SPDR (GLD).
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Disclosure: No positions at time of writing.