- Franklin Templeton leads the way with a 0.19% annual charge for its Ethereum ETF, inciting a pricing competition.
- Disclosure of ETF sponsorship fees by Franklin Templeton initiates a fierce battle for competitive pricing among market players.
- Franklin Templeton’s fee revelation spurs a race among investment firms to attract investors with low-cost products.
Franklin Templeton, an American multinational investment firm, has just announced fee details for its proposed spot Ether exchange-traded fund (ETF) product. This made them the first application to reveal costs to investors, igniting a fee war among competing Ethereum ETFs.
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Franklin Templeton recorded an upgraded S-1 record with the United States Securities and Exchange Commission (SEC) on May 31, 2024. The recording said that this ETF’s yearly sponsorship took a toll is 0.19% of its net asset value.
Bloomberg ETF analyst Eric Balchunas commented in an X post that this was “the opening shot in the ETH ETF fee war” launched by Franklin. These sponsorship fees are to compensate the fund manager for administrative costs and are a competitive aspect of ETF products because investors typically choose those with the lowest fees. While VanEck, Invesco, and Galaxy also filed updated S-1 applications the same day, none of them disclosed sponsorship fees.
The S-1 document is a registration statement that companies must record with the SEC, containing detailed point-by-point data about the company and the securities they are expected to offer or issue. According to Balchunas, there are no fees for other new S-1s. The cost war is on hold for now.
Before the spot Bitcoin ETF launched in January, Balchunas called the constant amendments to S-1 filings for fee adjustments a fee war. Some publishers are even waiving fees completely to be more competitive.
Bitwise, for example, is waiving all fees on their spot Bitcoin ETF for the first six months of trading and the first $1 billion in assets. Several other issuers, including Grayscale Investments and BlackRock, also filed amendments in late May.
Balchunas commented at the time that this was a good sign and there would likely be another round to flesh out the SEC comments. However, he said that launching a spot Ethereum ETF in late June was a real possibility.
Franklin Templeton has taken a big step by disclosing their fees, sparking intense competition in the Ethereum ETF market. The move marks the beginning of what may be a highly competitive period for investment firms looking to attract investors by offering products at the lowest costs.
With this low fee announcement, Franklin Templeton has sparked a fee war among other Ethereum ETFs, which will likely benefit investors by offering a more affordable investment option. This also marks a significant step forward in efforts to bring more crypto investment products to the broader market.
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