The iShares S&P 500 (SACC) and iShares S&P 500 B UCITS ETF (CSP1) products were originally priced at 40bp and have since undergone a series of price reductions. Deutsche Asset & Wealth Management and HSBC Global Asset Management have similar products offered at 9bp.
A key thing to note is the type of product that iShares is offering this cut rate on, according to Peter Sleep, senior investment manager at Seven Investment Management.
Both trackers offer cumulative shares, which means the investor does not receive cash flows as it is reinvested. It differs from income share trackers which offer dividend yields, but at 40bp, positioning these trackers as the most expensive.
For investors, there is no tax advantage as both 7bp and 40bp trackers are treated the same.
“The 7bp tracker would suit an investor who doesn’t want a cash dividend,” Sleep said.
“There has been a race to the bottom in terms of price since iShares lost its exclusive deal with S&P on both cumulative and income share trackers. The competition has lead to the pricing collapse of the cumulative tracker, which started out at 40bp like the income share tracker.”
