Fund News Advisors Can Use: Fund Managers Slash Expense Ratios Before Year-End

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Christmas came early for fund investors, with both Dimensional Fund Advisors and Vanguard announcing fee reductions across many of their mutual funds and exchange traded funds.

DFA announced on Dec. 16 plans to cut management fees on 47 mutual funds and three ETFs. The fund company said the changes, set to take effect Feb. 28, 2022, mean a 13% reduction on an asset-weighted basis for the impacted funds. The impacted funds cover a range of asset classes, including global equity, fixed income and sustainable and social funds.

In November, DFA filed to launch 10 new active transparent ETFs covering U.S., developed international, emerging markets and real estate equities, in 2022. In June, DFA converted four U.S. tax-managed equity mutual funds into active transparent ETFs, and in September, the company converted two more mutual funds—this time non-U.S. equity strategies—into ETFs. The firm now has more than $42 billion in ETF assets.

A day after DFA announced its fee reductions, Vanguard said it would cut fees for 17 fund shares, including nine fixed income ETFs. The changes would save investors an estimated $18.9 million, Vanguard said.

“This is the first round of Vanguard funds in the 2021–2022 fiscal-year period to report expense ratio changes,” Vanguard said in a statement.

Schwab also announced on Dec. 20 that it has reduced operating expense ratios on five fixed income ETFs from 5 to 4 basis points, including the Schwab Short-Term U.S. Treasury ETF (SCHO), Schwab Intermediate-Term U.S. Treasury ETF (SCHR), Schwab Long-Term U.S. Treasury ETF (SCHQ), Schwab 1-5 Year Corporate Bond ETF (SCHJ) and the Schwab 5-10 Year Corporate Bond ETF (SCHI). In addition, there will be no capital gains distributions for the 2021 tax year by any of Schwab’s 27 ETFs. Schwab added $37.8 billion in new assets to its ETFs over the first 11 months of 2021. 

The Anti-ARK ETF Surpasses $100M in AUM

Tuttle Capital Management’s Short Innovation ETF (SARK), which tracks the inverse of Cathie Wood’s ARK Innovation ETF, got off to a slow start when it was launched in November. But Tuttle said the fund now has $112 million in assets under management (as of Dec. 20, 2021), and the fund is averaging over $21.5 million traded per day on a turnover basis, making it the 5th most actively traded ETF launched so far this year. It’s up 23% since inception.

“Investors have really embraced the fund not only as a way to hedge their growth portfolios, but as a vehicle to invest against a basket of stocks that are especially vulnerable in a rising rate environment,” said Matthew Tuttle, CEO and CIO TCM, advisor to SARK, in a statement.

Schwab RIAs Get Access to T. Rowe Funds With No Transaction Fees

T. Rowe Price has formed a strategic partnership with Schwab, allowing registered investment advisors who custody with Schwab to purchase the fund manager’s lowest cost institutional share class funds with no transaction fees. That applies to about 120 institutional funds from T. Rowe spanning 65 Morningstar categories. It takes effect in February.

RiverNorth Acquires Minority Stake in TrueMark

RiverNorth Capital Management, a Chicago-based investment management firm specializing in opportunistic strategies, has acquired a minority stake in TrueMark Investments, a Rosemont, Ill. asset manager and advisor to the TrueShares actively managed ETFs.

The deal will enable RiverNorth to expand its current lineup of investment products, which include mutual funds, closed-end funds, private funds and separately managed accounts, into ETFs. The two firms will work together to develop a suite of ETFs under the RiverNorth brand.

“We’ve long admired their innovative investment approach, leadership team and operational prowess, and it didn’t take long to identify the synergies between our firms,” said Michael Loukas, principal and CEO at TrueMark Investments, in a statement. “This partnership represents a tremendous opportunity for the continued expansion of the TrueShares line-up with the addition of industry leading investment strategies from RiverNorth.”