Laurence Fink, chief executive officer of BlackRock, Inc. (NYSE:BLK) said the company plans to reduce the fees of some of its core exchange traded funds during the fourth quarter this year.
Fink announced the company’s plan during the Barclays 2012 Global Financial Services Conference in New York. According to him BlackRock, which is as one of the world’s largest asset managers lost some of its market shares to its competitors such as Vanguard Group Inc. that attract customers through cheaper ETFs.
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A report from Bloomberg cited that Fink was dissatisfied with BlackRock’s ETF market share during the second quarter. During a previous interview last July 18, he said ,“You saw risk off, even in ETFs, you had many flows into what I would call the commoditized ETFs, the large, index products, and Vanguard has taken a lot of the share of those flows in those products.”
During the Barclays 2012 Global Financial Services Conference, Fink explained that reduction will only apply to cerati ETFs with lower-fee competition and it will not be a wholesale fee on everything. He said, “We expect to be announcing a whole strategy in how are we addressing the fee issue related to these large, liquid, core types of ETFs.”
Find also added, “Those products are going to have reduced fees and reduced margins … but we still have increasing margins in some of our other ETF products. The key is about building out more innovative products.”
Furthermore, Fink said the BlackRock, Inc. (NYSE:BLK) expects to achieve a 40 percent margin growth in the future.
The company’s market share in the ETF business in the United States declined by 1.4 percentage points during the first six months of 2012 to approximately 41 percent while Vanguard market share rose by 1.7 percentage points to 18 percent based on the report released by the State Street Global Advisors.
According to Fink, BlackRock, Inc. (NYSE:BLK) manages assets worth $3.56 trillion. The company integrated the leadership of retail and iShares to boost the cross-selling of products.
BlackRock’s stock price is down by 1.15 percent to $179.92 per share during the morning at the New York Stock Exchange.