This fee war started before spot Bitcoin ETFs were approved, with issuers lowering their costs even then.
Invesco and Galaxy Asset Management announced on Monday that they are reducing the sponsor fee on their joint spot Bitcoin exchange-traded fund (ETF). The Invesco Galaxy Bitcoin (BTCO) ETF’s sponsor fee has been reduced by 14 basis points, lowering the total expense ratio from 0.39% to 0.25% (after waiver).
At 0.39%, the fund had one of the highest fees among its peers. The move to cut fees and attract more investors brings BTCO’s fee on par with those of most of its competition. Even so, Ark and 21Shares, Bitwise, and Franklin Templeton still have lower fees. California-based Franklin Templeton has the lowest post-waiver expense ratio at 0.19%. A post by Bloomberg Intelligence ETF analyst James Seyffart shows that Grayscale’s ETF is the highest-priced of the newly approved investment products at a fee of 1.5%.
This is what the fee table looks like now: pic.twitter.com/LPvd6YwGWJ
— James Seyffart (@JSeyff) January 29, 2024
In addition, according to the announcement, the fund will waive fees for the first six months or until it reaches $5 billion in assets:
“Invesco continues to waive BTCO’s entire fee on assets up to $5 billion for BTCO’s first six months of operations, effectively bringing the total expense ratio of BTCO to 0 basis points, with the discretion to extend the fee waiver further.”
This fee war started before spot Bitcoin ETFs were approved, with issuers lowering their costs even then. The United States Securities and Exchange Commission (SEC) approved the first-ever spot Bitcoin ETFs on January 10. Of the 11 greenlit funds, BlackRock and Fidelity have set themselves apart, with combined investor inflows of about $4 billion so far. This accounts for around 70% of total spot Bitcoin ETF inflows.
Invesco has had a less exciting start than its fellow TradFi issuers. BTCO has carved itself a spot in the middle of the pack. Since launch, the index provider’s fund has only recorded about $283 million in investor inflows. It has roughly the same amount of assets under management.
Typically, lower fees attract more investors and so it remains to be seen how this fee cut will affect the fund’s investor inflows.
On January 26, Harvest Hong Kong, one of China’s largest fund companies, submitted a Bitcoin spot ETF application to the Hong Kong Securities and Futures Commission. This is the first institution in Hong Kong to submit a Bitcoin spot ETF application. https://t.co/UgMfQ6G8xQ
— Wu Blockchain (@WuBlockchain) January 29, 2024
Meanwhile, Hong Kong could soon see its first spot Bitcoin ETF. Chinese fund company Harvest Global last week submitted a spot Bitcoin ETF application with the Hong Kong Securities and Futures Commission. The fund is expected to launch in February and could set a precedent for a shift in the digital asset investment landscape as it has the potential to sway investor preferences.
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