BlackRock trimmed expense ratios on two of its bond exchange-traded funds effective Wednesday, a move that Steve Laipply, its U.S. head of iShares fixed income ETFs, said was not a reaction to recent expense ratio reductions at rival Vanguard Group.
BlackRock, which has the world's largest bond ETF platform by assets, is constantly monitoring the industry and looks "very selectively" at certain products at different times, Mr. Laipply, a managing director, said in an interview Wednesday.
"This isn't a reactionary strategy at all," he said. "We have a very, very long-term view of our client segments and how they're using the products and how they view total cost of ownership."
The iShares MBS ETF saw its net expense ratio drop to 0.04% from 0.06%, while the iShares 0-5 Year TIPS Bond ETF's expense ratio declined to 0.03% from 0.05%. The changes were reflected in Securities and Exchange Commission filings Wednesday.
On Dec. 17, Vanguard reported lower expense ratios for 17 fund shares, including nine fixed-income ETFs, according to a news release. Those nine funds included four corporate bond ETFs and a mortgage-backed securities ETF. They did not include a TIPS ETF. Vanguard's move came after State Street Global Advisors on Dec. 1 reduced expense ratios on three SPDR Portfolio bond ETFs.
Todd Rosenbluth, head of ETF and mutual fund research at CFRA, said BlackRock's move likely stemmed from demand for such products rather than a reaction to moves by competitors.
"This is likely more the result of strong demand for fixed income ETFs, with another record year of net inflows, and iShares believing that there's room for further growth particularly with institutional investors seeking the liquidity and diversification ETFs provide," Mr. Rosenbluth said in an email Thursday. "BlackRock has the scale to keep costs low."
The $25 billion iShares MBS ETF "is increasingly being used by traditional institutions like asset managers for mortgage allocation," Mr. Laipply said, adding that the $9.1 billion iShares 0-5 Year TIPS Bond ETF "is something that's quite timely as you know because of inflation."