Why do ETF issuers create near-identical versions of their ETFs for the US and Europe? This seems to have been common long before the current PRIIPS situation.
E.g. iShares Core MSCI Emerging Markets - here is the iShares IEMG product page (US) and here the iShares EIMU product page (European). Both are USD distributing and both track the same index, i.e. the MSCI Emerging Markets Investable Market Index. The US version has an inception date of 2012 and a TER of 0.11% and the European one has an inception date of 2018 and a TER of 0.18%.
Similarly, iShare ICLN (US) and INRG (Europe). Both use the S&P Global Clean Energy Index as their benchmark and both are USD (distributing). Here the European version has an inception date of 2007, i.e. well before any talk of PRIIPS or such like.
Why did iShares construct non-US domiciled variants of these ETFs? If, as a European retail investor, I use a platform like Interactive Brokers, I could (pre-PRIIPS) buy either variant. And any institutional investor can, presumably, continue to do so today.
The European variants usually have UCITS tagged on at the end of the name. But I find it hard to believe any institutional investor would believe that the UCITS versions of such major ETFs were dramatically safer (as a result of conforming to UCITS) and therefore worth the increased TER.
Is duplication the consequence of rules for certain classes of institutional investor? E.g. that certain countries require their pension funds to only invest in EU domiciled funds? At a time when most countries are worried about the ability to meet future pension obligations, it would be odd to force such entities to incur a higher TER on essentially the same product that they can buy for cheaper in the US.
And until recently, EU retail investors were free to buy the US versions on platforms like Interactive Brokers. So the European versions weren't constructed for these buyers and anyway INRG (mentioned above) was created way before PRIIPS became a thing. And if one wanted to make the same ETF available to retail investors in the US and EU these days, surely one would just produce the necessary KID documents (as I understand it most ETF providers don't bother with this as PRIIPS doesn't really affect institutional investors and they, like everyone else, are happy to charge European retail clients a higher TER for similar products if given the legal cover to do so by the EU, e.g. Vanguard VWRL, with TER 0.25%, for EU retail clients vs Vanguard VT, with TER 0.08%, for US clients).
The European versions of such ETFs like IEMG/EIMU are typically available on LSE, AMS, ETR, SIX and MIL and available in the local currency, e.g. GBP, EUR or CHF. But I find it hard to believe that institutional investors or even retail investors find the convenience of not having to deal with FX issues or a non-local exchange like NYSE as worth justifying increased TER. Just to be clear, I know there are ETFs that feature some element of currency hedging (sounds pointless and expensive to me but so be it) but the ETFs I'm talking about are non-hedged and so other than the FX aspects of entering or exiting positions in these ETFs, it seems fairly irrelevant if their price is expressed in USD, EUR or whatever.
Sorry for such a long question. And sorry for my loose usage of the term European - most of the ETFs I'm talking about as "European" are domiciled in Ireland but with the bulk of volume being traded on LSE and then significant volume on ETR and AMS also.