Barclays made a substantial strategic attempt to build the ETF industry in 2000, launching over 40 new products under the iShares brand, backed by intensive education and marketing.
BlackRock bought the iShares brand and company from Barclays in 2009 and now manages a group of exchange-traded funds (ETFs).
The listing of iShares funds
iShares provides portfolio building blocks for small and large investors through the medium of ETFs. iShares offers more than 900 different investment products and has an AUM of over $ 3 trillion.
iShares provides a varied range of investment products based on strategies, assets, themes, goals, etc iShares has several ETFs and Mutual funds.
However, ETFs dominate the space. As of February 2022, iShares ETFs dominated the Market capitalization of the most significant exchange-traded funds (ETFs) worldwide.
Blackrock iShares offers various investment products in ETF and mutual fund parlance. They include underlying assets of bonds, stocks, real estate, commodities, etc., in developed and emerging economies.
One of the unique traits of iShares is that it is a leading player in offering sustainable ETFs. iShares has been providing ESG-based ETFs for its investors. ESG funds are funds that have underlying securities of firms and countries which have passed rigorous
Requirements of being ESG compliant.
- Only assets with a high sustainability score are included; this would rule out sovereign bonds with unsound ESG track records.
- An ESG in security selection leads to better-informed investment decisions, and sustainability funds may outperform non-sustainable funds due to superior risk management.
Companies having a lesser carbon footprint incur less regulatory scrutiny than others, thus making their stock stable over time.
Sustainable funds include ETFs classified as
Screened ETFs mimic specific indices that eliminate the risk of exposure to certain areas of business. iShares ESG Screened S&P 500 ETF is an example of a screened ETF.
A broad ESG ETF is a group of ETFs that track ESG-compliant sectors, businesses, and indices. It has several subcategories.
Broad ESG ETFs screen sectors and indices based on their ESG compliance- having several subtypes, namely.
Thematic ESG ETFs focus on one of the ESG themes of Environment, Social, or Governance. One such fund classification in thematic ESG is Carbon transition readiness.
These funds focus on companies and sectors that Blackrock feels are ready to work in a low carbon footprint economy. Impact funds generate sustainable outcomes alongside a financial return.
iShares also provides investors with a technologically superior core portfolio builder, which helps investors build their long-term wealth growth portfolio.
It also provides investors with ETFs based on various goals of wealth creation, income earning, active factor-based wealth creation, etc.
Income ETFs provide investors with two choices of ETFs
- One for yield
- Fixed income.
Yield ETFs include ETFs in the likes of Equity Income ETFs, High Yield Bond ETFs, International Bond ETFs, Tax-Free Muni ETFs, Hybrid Security ETFs, Real Estate ETFs, and multi–Asset ETFs.
Fixed-income ETFs include ETFs like Core Bond ETFs, Investment Grade ETFs, Short Duration Bond ETFs, Tax-Free Muni ETFs, International Bond ETFs, Inflation-Protected ETFs, Interest Rate-Hedged ETFs, etc.
Along with ETFs, iShares also has a comprehensive collection of mutual funds that invest in asset classes like equities, bonds, real estate, etc. iShares mutual funds started as early as 1993, with the iShares S&P 500 index fund.
Some iShares Mutual Funds are
- Russell 1000 Large-Cap Index Fund
- iShares Developed Real Estate, Index Fund
- Short-Term TIPS Bond Index Fund
- iShares U.S. Aggregate Bond Index Fund, etc.
The bottom line is that whilst building a portfolio, neglecting iShares should not be the case.
FAQs
What is an ETF?
An ETF stands for exchange-traded fund (ETF). One single ETF is a basket of securities that can be bought and sold like mutual funds through a brokerage firm. ETFs track a specific index such as S&P, sector, commodity, or other assets. Much like stocks, ETFs can be traded on the market.
Is an ETF better than a stock?
Investing in an ETF is less risky than investing in a stock, as ETFs are diversified. In the case of ETFs, investors do not control what happens to the portions of the ETFs.
ETFs have a diversified profile of assets, and the risk associated with the investment is reduced significantly. In stocks, the risk attached is higher as the stock price depends entirely upon the company’s performance and other exogenous factors of the world.
Does BlackRock run iShares?
Blackrock is responsible for iShares ETFs and it is the largest asset manager in the world.
