Invesco and WisdomTree Spearhead Fee Reduction Wave in European ETPs Amid Intensifying Global ETF Competition

The recent fee war surrounding spot Bitcoin exchange-traded funds (ETFs) has reached Europe, as asset managers Invesco and WisdomTree strategically lower fees on their European-listed exchange-traded products (ETPs). This move follows the United States Securities and Exchange Commission's (SEC) approval of ETF listings, intensifying competition globally.

Main Points:

1. Fee Reductions by Invesco and WisdomTree: Invesco and WisdomTree, two major asset managers, announce substantial fee reductions exceeding 60% on their European-listed ETPs. The Invesco Physical Bitcoin ETP (valued at $137 million) will witness a fee reduction from 0.99 percent to 0.39 percent, while the WisdomTree Physical Bitcoin ETP (valued at $325 million) will see fees decrease from 0.95 percent to 0.35 percent.
2. Global ETF Competition Influence: The fee cuts are attributed to increased competition and the availability of multiple ETFs in the U.S., a prominent global financial market. The recent SEC approval of 11 ETFs in the U.S. has shifted the demand dynamics, reducing the reliance of U.S. investors on European-based ETPs.
3. Structural Differences in European ETPs: Notably, digital asset exchange-traded products in Europe are structured as exchange-traded notes (ETN) rather than funds. ETN investors own debt security, while ETF shareholders own a share of the fund's underlying assets.
4. Impact of U.S. ETF Fee Adjustments: Gary Buxton, Invesco's Head of ETFs for Europe, explains that multiple U.S.-based ETFs adjusted their fees to establish a new equilibrium between supply and demand. This adjustment resulted in significantly lower prices compared to existing ETPs in Europe.
5. Liquidity and Accessibility Factors: U.S.-based Bitcoin ETFs are highlighted for their increased liquidity and accessibility on a single exchange platform. The ease of access and higher liquidity make these U.S.-based ETFs more attractive to European investors compared to their European counterparts.
6. Strong Performance of U.S.-Based Bitcoin ETFs: The newly launched spot Bitcoin ETFs in the U.S. have demonstrated strong performance, attracting billions in trading volume from their initial days. Even after two weeks, these ETFs continue to trade billions in daily volume, further contributing to their appeal.

The fee reductions by Invesco and WisdomTree underscore the competitive landscape in the global ETF market, particularly influenced by recent developments in the U.S. The shift in demand dynamics and the structural differences between European and U.S.-based ETPs are reshaping investor preferences and influencing fee adjustments.

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Summary:

Invesco and WisdomTree lead the way in fee reductions for European-listed ETPs amidst the ongoing global fee war related to spot Bitcoin ETFs. The significant fee cuts, exceeding 60%, are a response to heightened competition and the SEC approval of ETF listings in the U.S. The structural differences between European and U.S.-based ETPs, along with the increased liquidity and accessibility of the latter, contribute to the strategic fee adjustments. The strong performance of U.S.-based Bitcoin ETFs further adds to their appeal in the eyes of European investors.