Invesco and WisdomTree Slash European Bitcoin Product Fees by Over 60% Amidst Surging ETF Competition
In response to surge in Bitcoin ETFs in the United States, Invesco and WisdomTree have reduced fees by 60% on European Bitcoin products.
Investment management company Invesco and global exchange-traded fund (ETF) WisdomTree have significantly reduced fees by more than 60% on European Bitcoin products. This move comes in response to an “unprecedented” surge in the availability of new exchange-traded funds (ETFs) for investors in the United States.
The fee adjustments affect the $325 million WisdomTree Physical Bitcoin ETP, reducing fees from 0.95 per cent to 0.35 per cent, and the $137 million Invesco Physical Bitcoin ETP, lowering fees from 0.99 per cent to 0.39 per cent. These fee reductions were announced in close succession and are scheduled to take effect before the end of the month.
Furthermore, Invesco’s US product will temporarily forego fees for the initial six months or until it accumulates assets worth $5 billion, after which it will implement a charge of 0.39 per cent. This fee structure aligns with the recently disclosed pricing for its European product.
The introduction of spot Bitcoin ETFs in the United States has garnered significant interest in Europe.
However, many investors may not be aware that they have had access to similar exposure through physically backed ETPs since 2019. the launch of spot Bitcoin ETFs in the United States contributes to the evolution of the cryptocurrency market, as the asset class strives to establish a position in client portfolios, according to Alexis Marinof, Head of WisdomTree Europe.
In Europe, the majority of digital assets exchange-traded products are structured as exchange-traded notes (ETNs), as opposed to funds. Investors in ETNs possess a debt security, while ETF shareholders own a share of a fund’s underlying assets.
Moreover, investment management firm VanEck, headquartered in the United States has expressed intentions to pursue a more assertive marketing approach for its cryptocurrency products in Europe, following the US Securities and Exchange Commission (SEC) approval of eleven spot Bitcoin ETFs two weeks ago.
According to Martijn Rozemuller, chief executive officer of VanEck’s European business, in addition to fostering investor interest in cryptocurrency, the SEC’s decision likely bolstered VanEck’s brand in Europe, attributed to the media coverage of its Bitcoin ETF.
The products listed in the United States might be more liquid, making them appealing to European investors due to the larger market and lack of dispersion across multiple exchanges as seen in Europe.
SEC Approval Leads to Fee Competition
The US SEC granted approval to list spot Bitcoin ETFs on local exchanges to notable issuers including BlackRock, Fidelity, Grayscale, ARK 21Shares, VanEck, Valkyrie, Bitwise, WisdomTree and Invesco among others. This has resulted in an unprecedented supply of new products for the US investors, who, in the past, would have needed to turn to Canadian or European providers for exchange-traded exposure to the cryptocurrency.
During the application process, multiple providers have reduced their fees as the United States market navigated to establish a new balance between supply and demand. The resulting range of prices was considerably lower than existing tracking products in Europe.
Investment management firm Ark Investment Management initially proposed pricing its US ETF at 0.8 percent. However, it was launched with no fees for the first six months or until assets reach $1 billion. After this period, the fee will be 0.21 percent.
Likewise, BlackRock investors will incur a fee of 0.25 percent for its product, with early investors accessing it at 0.12 percent for the first year until assets reach $5 billion.
As all the ETFs are expected to provide the same return, their fees play a crucial role in attracting new assets. However, according to analysts, most providers may close in the “medium term” due to such a low fee structure that is quite challenging to maintain.
In response to the influx of new spot Bitcoin ETFs in the United States, Invesco and WisdomTree have decided to lower fees on their Bitcoin products in Europe in an attempt to withstand the competition.
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