Franklin Templeton, a prominent American investment firm, has recently filed an amended S-1 application for its proposed Ether (ETH) exchange-traded fund (ETF) product. This move makes Franklin Templeton the first among the applicants to disclose the fees it will charge investors.
According to a filing with the United States Securities and Exchange Commission on May 31, Franklin Templeton stated, “The fees of the Sponsor accrues daily at an annualized rate equal to 0.19% of the net asset value of the Fund.” This disclosure has sparked what Bloomberg ETF analyst Eric Balchunas refers to as the “ETH ETF fee war,” with Franklin Templeton leading the charge. Balchunas asserts that the fee structure appears to be permanent, as it mirrors the fee for Franklin Templeton’s spot Bitcoin ETF product.
The sponsor fees, which compensate the fund manager for administration expenses, play a crucial role in the competitiveness of ETF products, as investors typically opt for those with the lowest fees.
While VanEck, Invesco, and Galaxy also submitted amended S-1 applications on the same day, none of them disclosed their sponsor fees. As of now, the other Ether ETF applicants have yet to reveal their fee structures.
S-1 applications are registration statements that companies must file with the SEC, providing comprehensive information about the company and the securities they plan to offer or issue. Balchunas notes that the lack of fees disclosed in the new S-1 filings suggests that the fee war is currently on hold.
Balchunas previously referred to the constant amendments for fee adjustments in S-1 filings as the “fee wars” when spot Bitcoin ETFs were launched in January. In an effort to gain a competitive edge, some issuers even waived their fees entirely. For example, Bitwise waived all fees on its spot Bitcoin ETF for the first six months of trading and the first $1 billion in assets.
In related news, Grayscale Investments and BlackRock submitted amendments on May 30 and May 29, respectively, indicating their interest in launching Ethereum ETFs. Balchunas commented at the time that this was a positive development, predicting that other issuers would follow suit soon. He also suggested that spot Ether ETFs could potentially launch by the end of June.
In conclusion, the filing of an amended S-1 application by Franklin Templeton for its proposed Ether ETF product marks a significant step in the ETF landscape. The disclosure of fees by Franklin Templeton sets the stage for a potential fee war among ETF applicants, as investors typically gravitate towards products with lower fees. Other applicants are yet to reveal their fee structures, and the launch of spot Ether ETFs by the end of June remains a possibility.