Thursday, July 8, 2010

Fee War Started

In a move to cut out the SPDR Gold Shares Trust (GLD), BlackRock has cut the fees on its much smaller iShares Comex Gold Trust (IAU) to 0.25% of holdings from 0.4%. The latter figure is the same as GLD's.

As a Wall Street Journal "Fund Track" article explains, this move would save some money for a long-term holder but frequent traders would have such expenses swamped by commissions; so, it may be sensible for them to stick with GLD. (The market for GLD is far more liquid than the one for IAU.) Existing holders of GLD would incur a capital gains tax at the high rate for collectibles if they switched (unless said shares are held in a tax-deferred retirement account), so the fee cut is most beneficial for new buyers.

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