U.S. ETF Industry Faces Potential Distribution Fee Changes
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 5d ago
0mins
Should l Buy BLK?
Source: Benzinga
- Emerging Distribution Fees: U.S. brokerage firms and custodians may soon impose distribution fees on ETF managers, potentially reshaping the cost structure of the $13.5 trillion U.S. ETF industry, particularly after over a decade of zero-commission trading that has disrupted traditional revenue streams.
- Impact of Zero-Commission Trading: Companies like Robinhood have attracted millions of retail investors with zero trading commissions, forcing traditional brokers like Fidelity and Charles Schwab to eliminate ETF trading fees, which, while retaining clients, has significantly impacted their profitability.
- Changing Cost Structure: J.P. Morgan estimates that the current U.S. ETF management fee pool is around $21 billion, and if intermediaries capture 10% to 20% of ETF expense ratios, the industry could incur an additional $2 billion to $4 billion in distribution costs annually, affecting investor returns.
- Market Competitive Landscape: Large ETF issuers may be better positioned under this new fee structure, while mid-sized firms could face greater pressure, particularly niche and actively managed ETFs that may be the first to feel the impact, potentially halting the decline in their expense ratios.
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Analyst Views on BLK
Wall Street analysts forecast BLK stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for BLK is 1336 USD with a low forecast of 1218 USD and a high forecast of 1514 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
12 Analyst Rating
10 Buy
2 Hold
0 Sell
Strong Buy
Current: 1054.800
Low
1218
Averages
1336
High
1514
Current: 1054.800
Low
1218
Averages
1336
High
1514
About BLK
BlackRock, Inc. is an investment management company. The Company provides a range of investment management and technology services to institutional and retail clients. Its diverse platform of alpha-seeking active, private markets, index and cash management investment strategies across asset classes enables the Company to tailor investment outcomes and asset allocation solutions for clients. Its product offerings include single- and multi-asset portfolios investing in equities, fixed income, alternatives, and money market instruments. Its products are offered directly and through intermediaries in a range of vehicles, including open-end and closed-end mutual funds, iShares exchange-traded funds, separate accounts, collective investment funds and other pooled investment vehicles. It also offers technology services, including the investment and risk management technology platform, Aladdin, Aladdin Wealth, eFront, and Cachematrix, as well as advisory services and solutions.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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