Half of Bitcoin ETF applicants disclose management fees as approval nears
With the potential approval for a spot Bitcoin exchange-traded fund (ETF) looming as early as next week, only half of the 13 applicants have disclosed how much they plan to charge in management fees. This has become a crucial figure for prospective investors to focus on as they consider which ETF to invest in.
While various factors determine the popularity and trading volume of an ETF once it hits the market, in this case, all ETFs will hold the same asset – Bitcoin. As a result, details such as management fees become a vital differentiating factor.
James Seyffart, an ETF analyst at Bloomberg Intelligence, emphasized the importance of fees, stating, “I don’t think the issuers have to offer the absolute lowest fee, but I do think they can’t be charging too much more and still remain competitive.”
The fee, known as the expense ratio, covers costs such as custodial services, marketing, and salaries. According to Morningstar research, the average fee for mutual funds and ETFs was 0.37% in 2022, significantly lower than it was 20 years ago.
Invesco and Galaxy have set the bar by waiving fees completely for the first six months and the first $5 billion in assets, after which they will charge 0.59%. Fidelity has set the lowest fee at 0.39%, while Ark, 21Shares, and Valkyrie plan to charge 0.80%.
Nate Geraci, president of The ETF Store, stressed the importance of the expense ratio in this competitive category, stating, “From a pure competitive standpoint, expense ratio matters greatly in this particular category.”
BlackRock, the world’s largest asset manager, has not yet disclosed how much it will charge. However, it is likely to be a front runner in popularity given its name recognition, track record, and successful funds. Seyffart predicts BlackRock’s fee to be around Fidelity’s number of 0.39%, while Geraci sees it falling between 0.40% and 0.80%.
Overall, management fees are becoming a crucial factor for investors to consider as they weigh their options for investing in a potential spot Bitcoin ETF. With only half of the applicants disclosing their fees, the final lineup of ETFs and their fees remains to be seen as the approval process unfolds.