Morgan Stanley, with its updated application to the US Securities and Exchange Commission, announced the management fee in the spot Bitcoin exchange-traded fund (ETF) it is working on as 14 basis points. This rate is one step below similar products currently on the market. The bank’s move could spark a new fee competition among rival ETF providers.
The wage balance in the market is changing
In the latest application, the fee rate offered by Morgan Stanley is positioned below the 15 to 25 basis point range currently applied by leading funds. Currently the lowest-fee ETF on the market, Grayscale’s Bitcoin Mini Trust carries a 0.15 percent annual fee. In BlackRock’s iShares Bitcoin Trust (IBIT) fund, one of the largest products in the industry, this rate is announced as 25 basis points.
Although the rates seem close, a small fee difference can be important for investors. Because spot Bitcoin ETFs offer similar price performance; Funds try to closely monitor the cryptocurrency price by holding Bitcoin directly. Therefore, cost becomes an important decision point for investors and advisors. With a single transaction, investors can switch to a lower-fee product while maintaining a similar market position.
In the past, small fluctuations in costs in the ETF industry had an impact on the flow of investment premiums. While low-fee funds generally receive new investments, fund outflows may accelerate in higher-cost products. It was noted that the total assets in Grayscale’s flagship Bitcoin Trust fund decreased from 29 billion dollars at the beginning of January 2024 to 10 billion dollars.
Major player’s influence and strategy
Morgan Stanley is among the largest financial institutions in the United States. The bank’s client assets under management reach trillions of dollars and it has an extensive network of financial advisors. Thanks to this scale, even small changes in the distribution of customer portfolios can create billions of dollars of activity throughout the market.
This approach to wage policy was evaluated as the bank’s aim to gain market share. Experts are of the opinion that cost and access stand out as key factors for most investors, as there are no other significant differences between the products.
Progress continues in the application process for Morgan Stanley’s ETF to be publicly traded. A trading list announcement for the MSBT fund in question came from the New York Stock Exchange. It was stated that if approval is given, the product can begin to be processed in a short time.
If regulators approve, Morgan Stanley’s spot Bitcoin ETF would be the first product issued directly by a major US bank. This development is expected to initiate a new era of competition in the field of pricing and distribution.
