The ProShares and Valkyrie ETFs have an annual maintenance fee of 0.97%.
The cheapest ETF is traded in Canada at a rate of 0.4% per annum.
Exchange traded funds or ETFs are causing a furor in the United States, either by shooting the price of bitcoin (BTC) to all-time highs, or, this time, because now the war will be on the ETF that offer the cheapest rates.
According to a report published by the Financial Times news portal, ETF fees would be the new battlefront to gain interest from big capital. They would be interested in having exposure to Bitcoin through this class of financial instruments.
In this sense, the portal collects data from the current three Bitcoin ETFs that are listed (or will be listed soon) on the United States stock market: ProShares, Valkyrie and the most recently launched, VanEck, which was scheduled for today, according to It was reported by . although it was postponed.
Commissions, within the ETF market, are known as annual management fees or maintenance fees. These set the percentage value to be charged for holding an ETF in one year. It should be noted that an ETF, in this case Bitcoin, offers exposure to the price of the cryptocurrency (or the future contracts), but not to the holding of the cryptoasset. This causes the brokerage house where the instrument is listed to charge a “maintenance” percentage.
The fee, although set on an annual basis, will depend on how long the ETF holder will hold the instrument. If a broker decides, for example, to buy a bitcoin ETF for exactly half a year, they will be charged 50% of the fixed annual commission.
ETF fees and how it affects investor interest
The first two bitcoin ETFs to hit the market – ProShares and Valkyrie – are trading, currently at an annual fee of 0.97%. In the case of VanEck, which is expected to be listed in the next few days, a rate of 0.65% is offered, a percentage difference of 30% below.
Although they are quite small percentage differences, below 1%, being large investments, the commission payments are millionaires.
On the first day of its listing, the ProShares ETF, BITO, passed the $ 1 billion mark in shares sold. Source: EricBalchuas / Twitter.
For example, the ProShares ETF raised more than USD 3.5 billion in just 4 days. Based on your current rate, this could mean, in commission payments alone, an approximate amount of $ 33 million. Extrapolating this same amount to the current VanEck ETF rate, the total savings can be up to $ 10 million..
As the article highlights, VanEck could start the rate war between the different ETFs on the market.
Kennet Lamont, strategy fund analyst, consulted by the newspaper, commented: “If we looked at other markets, we would have seen a similar story [de compresión de tarifas] over the years. I don’t think bitcoin is immune to market pressures. With this he refers to the future scenario that is approaching.
For his part, ProShares CEO Michael Sapir defended his ETF’s current fee, arguing that the current price was set based on your experience in the exchange-traded fund market.
It remains to be seen that other movements will be able to be made by large firms on ETFs, not only in those already circulating, but in those that are to come, which can finish exerting the necessary pressure for a rate war.