DEFINITION of iShares
A global leader in exchange-traded funds (ETF), iShares, Inc. has over $1 trillion invested in 800 different products. The funds are managed and brought to market by Blackrock, the world's largest asset management company. Founded in 2000, the initial listings were established on major exchanges such as the NYSE Euronext, Chicago Board Options Exchange, Nasdaq and NYSE Arca.
Today, almost all the major global marketplaces list iShares funds; the London Stock Exchange, the Hong Kong Stock Exchange, and the Toronto Stock Exchange among other well-established exchanges. At any given time, iShares and Vanguard represent over 50% of the total ETF market.
BREAKING DOWN iShares
Overall, iShares ETFs are a flexible, low-cost way for investors to gain exposure to various market segments, including fixed income, emerging markets, and broad-based indexes. For example, iShares' S&P 500 fund (IVV) is designed to track the performance of the S&P 500, whereas the iShares MSCI Emerging Market Index (EEM) tracks the progress of large and mid-capitalization equities in developing countries.
By combining low fees with tax efficiency in an asset that seeks to match an index, ETFs can build greater longer term savings than a comparable mutual fund. Beyond savings, most ETFs aim to match the performance of a benchmark index, meaning less frequent turnover within the fund and thus lower fees. This doesn't come at the cost of performance, though. In fact, iShares Core ETFs have on average outperformed more than 75% of comparable mutual funds over a 5 year time period.
Examples of iShares Exchange-Traded Funds (ETF)
Notably, iShares offers over 800 products across different asset classes, regions and market segments. Products grounded in asset classes seek to track the investment progress of equities, fixed income, commodities, and real estate, whereas regions and market segments observe emerging and developing markets as well as individual countries in Europe and Asia. Also, iShares ETFs employ popular smart beta strategies like dividend yield, minimum volatility, momentum, and quality to capture greater risk-adjusted returns than traditional market cap indexes. Below are some popular products under the iShares brand:
- iShares Core S&P 500 ETF (IVV): This is the largest ETF that Blackrock offers commanding over $140 billion in assets under management. It started in May 2000 with the goal of tracking progress of the S&P 500.
- iShares MSCI EAFE ETF (EFA): This is the second largest ETF offering and seeks to track the investment results of Europe, Australasia, and the Far East.
- iShares Core US Aggregate Bond ETF (AGG): The largest fixed income asset by iShares that provides broad exposure to investment grade bonds.