Larry Fink, chief executive of BlackRock, has praised Vanguard as an ‘excellent company’ but dismissed the notion of an exchange traded fund (ETF) price war with its nearest rival despite cutting charges on a range of instruments.
Speaking after the firm’s third quarter results, Fink said the move by ETF providers to lower fees is not a ‘price war’ and believes the concept of a tussle over cost is a myth.
In a call with analysts Fink (pictured) was asked how BlackRock would react if Vanguard further reduced fees on its tracker products.
‘Vanguard is an excellent company. They have a great market position. They have a great brand. I'm not here to talk about my competitors. They are actually a big client of BlackRock's, too. So I am not here to discuss what Vanguard may or may not do,' Fink said.
He added: ‘I believe we're in a very good position. I think we responded to some elements. But let me just say overall, this is not a price war. This is all about working with our clients. I think you guys, and I'm including the press, have created this myth about a price war.'
In contrast, he said the greatest dynamic that will fuel ETF growth is product engineering.
Fink's comments come shortly after BlackRock announced a raft of fee cuts on some of its US-listed ETFs to help recover the market share taken by Vanguard, though it was a move
Fink did not touch on BlackRock's motives during his tele-briefing with analysts, and instead offered insight on his take on markets.
Volatility will continue to be a theme, Fink said, and BlackRock could well be affected, but the chief is confident the asset manager can overcome this.
He said: 'I do believe we are going to still be in an era of uncertainty, of volatility, and we're going to be in an era where politics will intersect with economics. And this is a very large change that we've witnessed in many other markets. And I think this is going to be a part of our markets in the coming years.'