Barclays Joins the Price War, Launches First Zero-Fee ETNs

The company offers two ETNs - iPath Gold ETNs and iPath Silver ETNs.

With financial institutions increasingly starting to offer their products for free, such as zero-commission stock trading, Barclays Plc has joined in by starting the first no-fee exchange-traded notes (ETNs) in the United States.

According to a statement released by the British bank on Monday, the ETNs are split into two categories – iPath Gold ETNs (Ticker: GBUG) and the iPath Silver ETNs (Ticker: SBUG). Furthermore, the ETNs are the first no-fee exchange-traded products to offer exposure to precious metals, the company said.

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The ETNs are set to begin trading on the NYSE Arca exchange this Tuesday. The iPath Gold ETN will track the Barclays Gold 3 Month Index Total Return gauge, the company said in its statement. The iPath Silver ETN, on the other hand, will follow the Barclays Silver 3 Month Index Total Return index.

Ian Merrill of Barclays
Ian Merrill, Managing Director at Barclays
Source: LinkedIn

Commenting on the announcement, Ian Merrill, Managing Director and Head of US Equity Derivative Sales, said: “Since Barclays brought the first ETNs to the US market in 2006, we have been consistently focused on providing investors with innovative and efficient products. 

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“Today marks another exciting day in the evolution of Barclays’ iPath platform with the introduction of the first-ever ETNs that have no investor fees, and the first-ever no-fee ETPs offering exposure to precious metals.”

The fee war continues

Barclays is the latest asset manager to start offering a commission-free trading product. Fidelity Investments started off the trend in the space, by offering no-fee mutual funds, which was followed by Social Finance Inc., otherwise known as SoFi, which removed fees on two broad stock ETFs.

However, according to a report from Bloomberg, despite providing investors with notes that are free and have a tax advantage over physically-backed commodity products, the British bank may struggle to attract investors. 

“I don’t think these are likely to move the needle all that much,” Eric Balchunas, an analyst at Bloomberg Intelligence, highlighted. “For the most part, when people invest in gold and silver, they like to have it physically backed.”

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