In order to remain competitive with firms such as Vanguard, BlackRock has confirmed it will cut its ETF fees in the fourth quarter 2012, reports Chris Flood of the Financial Times.
However, the company will not cut charges across its entire iShares ETF range. Instead, it will reduce fees on a select number of U.S. products, says BlackRock chief executive Larry Fink.
He adds BlackRock still anticipates its margins would increase to more than 40% in the near future.
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Luke Montgomery, analyst at Bernstein Research, predicts BlackRock’s earnings could be reduced by 3% to 7% as a result. He has a 12-month share price target of $205 for the firm, and a “market-perform” rating.
This year, BlackRock’s share price has been flat (down 0.2%) at $177.83, underperforming the S&P 500 by 12.2%, reports Flood.