iShares expands actively managed factor ETF offering

Feb 28th, 2014 | By | Category: Equities

iShares, the exchange-traded funds (ETFs) business of BlackRock, has expanded its factor ETF line-up with the launch of two “enhanced” international equity ETFs on the NYSE Arca.

iShares expands actively managed factor ETF offering

The new ETFs are actively managed using BlackRock research.

The iShares Enhanced International Large-Cap ETF (IEIL) and iShares Enhanced International Small-Cap ETF (IEIS) seek to provide competitive risk-adjusted returns compared to broad international large-cap or small-cap indices, respectively.

Rather than tracking an index, the new ETFs are actively managed using BlackRock research and complement two existing ETFs, launched in April 2013, managed on a similar basis.

The family of so-called “enhanced” ETFs are designed in partnership with Registered Investment Advisors (RIAs) who want access to multiple factors – quality, value and size – packaged in an ETF to help them manage equity exposures and risk.

Patrick Dunne, Head of iShares Global Markets and Investments, commented: “Factor investing has become increasingly popular as investors look for opportunities to potentially outperform the market over the long-term. We’ve had a positive response from investors on the entire iShares Factor ETF suite, which currently has over $7.3 billion in assets under management (AUM) at February 21, 2014.”

He added: “The new iShares Enhanced International ETFs combine well-known factors and provide investors with easy access to multi-factor strategies based on BlackRock’s insights. They are of interest to investors who prefer a blending of factors in a single ETF to effectively maximize diversification and manage risk.”

Factors are a set of investment characteristics which explain the risk and return behaviour of an asset or stock. Every asset has a unique set of factor exposures – such as quality, value, size and momentum – that influence the asset’s return. Factor investing is a well-documented, differentiated approach to traditional market-capitalization investing.

iShares currently offers a suite of factor products: four iShares MSCI USA Factor ETFs that focus on single factors, four iShares Minimum Volatility ETFs that concentrate on volatility reduction and, following this latest launch, four iShares Enhanced ETFs that provide multi-factor strategies.

IEIL has an expense ratio of 0.35%, while IEIS has an expense ratio of 0.49%.

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