The Mad Hedge Fund Trader has posted a short commentary on hedgetracker.com. His premise is that new entrants into the ETF space will break the monopoly of BlackRock, State Street and Vanguard. He cites new offerings by PIMCO, Van Eck, and ProShares as competition that will drive costs down and improve profit margins for traders.
In general, competition will tend to put downward pressure on pricing of similar products. That said, Vanguard and State Street are two of the lowest cost producers in the industry, and Barclays was one as well. Since BlackRock picked up the indexing business of Barclays (including the iShares franchise), it seems that BlackRock will continue that business model. On the other hand, PIMCO, Van Eck, and ProShares are not considered among the pricing innovators. Don't expect them to lead a revolution in ETF pricing any time soon.
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