Bitwise Leads in Low-Fee Bitcoin ETFs, Grayscale Backs Size

• Pending Bitcoin ETFs Reveal Charges Ahead of SEC Decision
• Comparing Fee Structures
• BlackRock Undercuts Competitors
• Observations from Bloomberg Intelligence
• Wide Array Of Pricing
• The Case of Grayscale
• Expert Opinions on Grayscale's Pricing
• 2022 ETF Fee Context

Pending Bitcoin ETFs Reveal Charges Ahead of SEC Decision

With the U.S. Securities and Exchanges Commission (SEC) projected to approve at least one spot bitcoin exchange-traded fund (ETF) in the next two days, all potential issuers have revealed their fee, which is arguably the most crucial detail about their product. The proposed fees for the 13 awaiting ETFs vary significantly, presenting an avenue for these funds to distinguish themselves. Lower fees, determined as a percentage of the fund's net assets, increase the potential return for investors.

Comparing Fee Structures

Bitwise, an established name in the crypto investment space, has set its fee at 0.24%, waiving the fees entirely for the first six months. Its competitors Ark, 21Shares, and VanEck plan to charge fees of 0.25%. Franklin$0.0015 -3.24% slightly tops these with a fee of 0.29%.

BlackRock Undercuts Competitors

BlackRock, the world's largest asset manager, has set its fee at 0.30%, a decision that will likely impact its competitors. Given its size and reputation, the market had expected it to set a higher fee while remaining competitive.

Observations from Bloomberg Intelligence

Bloomberg Intelligence's ETF senior analyst, Eric Balchunas, made a note of BlackRock's pricing decision, stating, Life just got a lot tougher for everyone else.

Wide Array Of Pricing

Other issuers have proposed higher fees. Fidelity set its fee at 0.39%, while Invesco and Galaxy have set theirs at 0.59%. Valkyrie and Hashdex have chosen to set their fees at 0.80% and 0.90%, respectively. Similar to Bitwise, most issuers plan to offer lowered fees for a set period post-launch.

The Case of Grayscale

However, Grayscale, which is aiming to convert its Grayscale Bitcoin$42,260 -0.64% Trust (GBTC) into an ETF, proposes to charge a higher fee of 1.5%. Though this is less than the trust's 2% management fee and there is potential for waiving the fee, some believe it may struggle to compete with the other applicants.

Expert Opinions on Grayscale's Pricing

ETF expert Nate Geraci stated, simply isn't going to cut it, regarding Grayscale's fee. Similarly, Balchunas couldn't imagine advisors opting for a 1.5% ETF. However, Grayscale has an advantage in terms of size, already managing over $27 billion of assets, an achievement unparalleled by the other ETFs, which are starting from ground zero.

2022 ETF Fee Context

For context, the average fee levied on ETFs in 2022 was approximately 0.37% as per research conducted by Morningstar.

Edited by Jonathan Stoker