Amundi has launched a new global equity ETF charging just 0.09% annually, despite already offering a fund tracking the same index at five times the price.
The Amundi Core MSCI ACWI Swap UCITS ETF (ACW1/WIDE) began trading on the London Stock Exchange on 29 October, with sterling and US dollar trading lines. It tracks the MSCI All Country World Index, providing exposure to large- and mid-cap companies across developed and emerging markets.
The Luxembourg-domiciled fund uses synthetic replication, meaning it employs swap agreements with financial institutions to deliver the index’s returns rather than directly holding all its constituent stocks. It reinvests dividends and launched with approximately €100m in assets.
The launch puts it in direct competition with Amundi’s existing MSCI All Country World Swap UCITS ETF (ACWL), which charges 0.45% annually and also uses synthetic replication. According to ETF Stream, Amundi has no plans to merge the two funds, arguing that the older product benefits from greater liquidity in the secondary market.
The new ETF is among Europe’s cheapest MSCI ACWI trackers, although BNP Paribas currently offers a competing fund charging 0.06%.
Our view
David Batchelor, senior analyst at QuotedData, said: “The most interesting aspect of this launch is not the exceptionally low fee, but Amundi’s decision to introduce a near-identical product at one-fifth of the cost of its existing offering. This raises an obvious question for existing investors: why should they continue paying 0.45% when the same manager is offering exposure to the same index for 0.09%? Amundi points to the older fund’s greater trading liquidity, but that advantage may become harder to justify as the new ETF attracts assets.
The launch also demonstrates how fierce competition has become in the market for core equity ETFs, where fees are increasingly approaching zero. However, the cheapest fund is not necessarily the best option. Investors also need to consider trading spreads, tracking performance and liquidity, particularly for a newly launched product”.
