BlackRock Asset Management is sending a notice to unitholders of iShares exchange traded funds that, effective July 1, 2010, the management expense ratio of a long list of iShares Funds are increasing by 0.01% to 0.03%:
An iShares Fund’s management fee is the fee paid by the fund to BlackRock Canada for acting as the trustee and manager. It does not include any applicable taxes or other fees and expenses of the iShares Funds. For any iShares Fund which invests in other iShares ETFs, the management fee does include any fees paid to BlackRock Canada or its affiliates by such fund(s).
While all iShares Funds are legally responsible for the payment of applicable GST on their expenses, historically, BlackRock Canada has paid this cost on behalf of the iShares Funds listed below. To bring its practice in line with industry practice, effective July 1, 2010, BlackRock Canada will no longer pay GST on behalf of its family of iShares Funds. There will be no change to the amount of management fees paid by any iShares Fund. However, the change in practice to cease paying for the iShares Funds’ GST liability will result in an iShares Fund’s respective management expense ratio (which includes GST) increasing slightly, by between 0.01% and 0.03%. The increase depends on an iShares Fund’s management fee and will vary from fund to fund.
All iShares funds in the Canadian Equity, Canadian Fixed Income, International Equity and Portfolio Builder categories that are not listed below are affected by this change:
- iShares S&P/TSX 60 Index Fund (XIU)
- iShares MSCI Brazil Index Fund (XBZ)
- iShares China Index Fund (XCH)
- iShares S&P Latin America 40 Index Fund (XLA)
- iShares S&P CNX Nifty India Index Fund (XID)
- iShares U.S. IG Corporate Bond Index Fund CAD-Hedged (XIG)
- iShares U.S. High Yield Bond Index Fund CAD-Hedged (XHY)
My Take: BlackRock probably feels that the introduction of the HST is an opportune moment to stop paying out the GST out of its management fee. Investors will be on hook for another increase of 0.02% to 0.05% when the HST kicks in on July 1.
