What is iShares? Everything you need to know

iShares is among the largest ETF providers globally and is owned by BlackRock, one of the biggest asset management firms in the world. With thousands of diverse ETF funds available, iShares has become a favored option for both individual and institutional investors.

This article from AZCoin aims to provide you with a better understanding of iShares and the reasons behind its popularity.

iShares Concept

iShares is the largest ETF management company globally, managing nearly $2 trillion in over 800 different products across a wide range of asset types and investment strategies. It operates as a subsidiary of Blackrock, which is the largest asset management firm in the world, with Blackrock responsible for the issuance and marketing of iShares products.

Founded in 2000, the initial lineup of iShares was created on major exchanges such as NYSE Euronext, the Chicago Board Options Exchange, Nasdaq, and NYSE Arca.

Advantages of iShares

• Product diversity: iShares offers a wide array of ETF funds, ranging from those that track broad market indices like the S&P 500 to those focusing on specific sectors such as technology, healthcare, energy, or emerging markets.
• Large scale and high liquidity: iShares’ ETF funds are typically large in size, ensuring high liquidity. This means you can easily buy or sell ETFs without significantly impacting their market price.
• Low costs: Compared to other investment vehicles, the management fees for iShares ETFs are generally much lower, which helps maximize investor returns.
• Transparency: The investment portfolio structures of iShares ETFs are publicly disclosed, making it easy for investors to understand what they are investing in.

Fundamentals of iShares

In general, iShares ETFs offer a flexible and low-cost way for investors to gain exposure to various market segments, including fixed income, emerging markets, and broad-based indices. For instance, the iShares S&P 500 fund (IVV) is designed to track the performance of the S&P 500, while the iShares MSCI Emerging Markets Index follows the progress of mid- and large-cap companies in developing countries.

By combining low fees with tax efficiency for an asset, and aiming to replicate a benchmark index, ETF funds can potentially generate greater long-term savings compared to a similar mutual fund.

Alongside saving, the majority of ETFs seek to match their results with a benchmark index, which typically results in reduced ongoing income for the fund and, as a result, lower fees. Nevertheless, this does not negatively impact performance.

In fact, iShares Core ETFs have outperformed over 75% of mutual funds when compared over a five-year period.

Currently, nearly all major global markets feature a range of iShares funds, including the London Stock Exchange, Hong Kong Stock Exchange, and Toronto Stock Exchange among them. At any given time, iShares and Vanguard collectively account for more than 50% of the total ETF market.

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Examples of iShares

ETFs It is noteworthy that iShares offers over 800 products across various asset types, regions, and market segments. These products aim to track investment performance in equities, fixed income, commodities, and real estate. Meanwhile, the regional and segment offerings monitor emerging and developing markets, as well as individual countries in Europe and Asia.

Additionally, iShares ETFs employ intelligent and popular beta strategies such as dividend yield, minimum volatility, price momentum, and quality, in order to achieve higher risk-adjusted returns compared to traditional market-cap-weighted indices.

Here are some well-known products under the iShares brand:

• iShares Core S&P 500 ETF (IVV): This is the largest ETF offered by Blackrock, with more than $140 billion in assets under management. It was launched in May 2000 with the goal of tracking the performance of the S&P 500.
• iShares MSCI EAFE ETF (EFA): This is the second-largest ETF offering, aimed at tracking investment results from the regions of Europe, Australasia, and the Far East.
• iShares Core US Aggregate Bond ETF (AGG): This is iShares’ largest fixed income asset, providing broad exposure to investment-grade bonds.

Why should you consider investing in iShares ETFs?

• Simplicity and accessibility: Investing in iShares ETFs is akin to purchasing stocks; transactions can be made easily through online trading platforms.
• Diversification: ETFs allow you to spread out risk by investing in a variety of assets. Instead of betting on a single company, you are investing in a whole collection of companies.
• Low costs: Lower expenses contribute to higher long-term investment returns.
• Global market access: iShares ETFs enable you to easily invest in stock markets across the globe.

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Conclusion

iShares represents an excellent option for investors looking to diversify their portfolios, tap into global markets, and benefit from low costs. However, it is essential to thoroughly research ETF funds and seek advice from financial professionals before making any investment decisions.

Keep in mind that the financial market is always fluctuating, so investing in ETFs carries inherent risks. Ensure that you fully understand these risks and the evaluation process before proceeding with any investment choices.