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Asset management company Franklin Templeton has initiated a “fee war” for spot Ethereum (ETH) exchange-traded funds (ETFs) by being the first company to disclose fund management fees in its updated S-1 filing. The American multinational investment company detailed in its final S-1 form submission to the U.S. Securities and Exchange Commission (SEC) that sponsor fees will accrue daily at an annual rate of 0.19% of the fund’s net asset value.
An Important Competitive Factor
This announcement was shared by Bloomberg ETF analyst Eric Balchunas, who noted that this move sets the stage for competitive fee disclosures among other spot Ethereum ETF applicants. As known, sponsor fees, which cover the administrative expenses of the fund manager, are a crucial competitive factor for ETFs since investors typically prefer lower-fee funds. Franklin Templeton’s fund management fee announcement matches the fee rate of the spot Bitcoin ETF product, indicating that this fee is likely permanent rather than promotional.
While Franklin Templeton disclosed its fund management fee, other spot Ethereum ETF applicants like VanEck, Invesco, and Galaxy did not disclose their fees despite submitting updated S-1 filings on the same day. The S-1 filings that companies must submit to the SEC are closely monitored as they provide detailed information about the company and the securities they plan to offer.
Balchunas noted that the fee war is temporarily on hold since no other fees were disclosed in the new S-1 filings. However, he emphasized the importance of fund management fee competition, referencing the “fee wars” that occurred before the launch of spot Bitcoin ETFs. During that period, some issuers even waived fees to attract investors, with Bitwise offering zero fund management fees for the first six months of trading and the first $1 billion in assets.
Grayscale Investments and BlackRock also submitted amendments to their applications to the SEC on May 30 and May 29, respectively. Balchunas indicated that this is a positive sign and that more fund management fee disclosures and changes are likely to follow.
Spot Ethereum ETFs Could Begin Trading by the End of June
Another round of amendments from issuers is expected to fine-tune responses to SEC comments. Experts see the launch of spot Ethereum ETFs by the end of June as a realistic possibility.
This means that at least one spot Ethereum ETF could begin trading in the U.S. by the end of June, which is significant for the cryptocurrency market.
