iShares said the series would cater for investors seeking exposure to global equity markets, but were targeting sources of return which could not be isolated through traditional market capitalisation weighted indices.
Each fund provides access to global equity markets and seeks to offer targeted exposure to a specific factor that has historically provided enhanced risk-adjusted returns.
The four funds target either value, size, quality or momentum.
Through these funds investors are able to express factor views throughout the business cycle.
They can be used as part of a broad portfolio to diversify portfolio risk or as niche exposures aiming to boost portfolio performance.
The funds complement iShares’ existing suite of Smart Beta ETFs, which includes a minimum volatility factor range that aims to provide broad, diversified market exposures with reduced volatility.
iShares Factor ETFs are based on MSCI indices to ensure each follows an index methodology.
The fund with value as its factor is iShares MSCI World Value Factor Ucits ETF. The fund is exposed to a sub-set of MSCI World stocks that capture undervalued stocks based on their fundamentals.
The size factor is represented by the iShares MSCI World Size Factor Ucits ETF, which is exposed to smaller capitalisation companies within the MSCI World investment universe.
For momentum the iShares MSCI World Momentum Factor Ucits ETF is exposed to a sub-set of MSCI World stocks that have recently outperformed on a risk-adjusted basis.
For investors looking at quality, the iShares MSCI World Quality Factor Ucits ETF is exposed to a sub-set of MSCI World stocks with strong balance sheets and stable earnings.
Sara Shores, global head of smart Beta for BlackRock, said: “Our smart Beta strategies are simply the next step in the 40-year evolution of passive investing at BlackRock. Through the iShares Factor ETFs, investors can now access sources of potential additional return in a passively implemented portfolio.
“Complementing our minimum volatility products, our new Factor funds allow investors to emphasise specific, high-conviction investment views or construct a broadly diversified portfolio along factor dimensions with the goal of outperforming the broad equity market.”
Reactions
Provider view:
Deborah Yang, head of MSCI’s index business in Europe, the Middle East, Africa and India, said: “We are delighted to license an innovative set of MSCI Factor Indexes to iShares for their new ETF Factor series. Built on a solid research framework and leveraging 40 years of factor expertise, MSCI’s family of factor indexes has been widely adopted by investors, with more than $100bn (£61.7bn) currently benchmarked to them.”
Adviser view:
Ian Lowes, an IFA with Lowes Financial Management in Newcastle, said: “BlackRock is giving investors the choice to make a call rather than making a pure passive play. For example, the quality fund may be suitable for an investor who is expecting a correction to the market.”
Charges: Each fund has a total expense ratio of 0.30 per cent.
Verdict: Normally with an ETF you get what you pay for – a passively managed fund which tends to do better when there is a bull market.
iShare would appear to be offering some more options for those with a more specific investment strategy. Taking such individual calls may be a good idea if the investor has a strong view as to which way the market will go, but if they are wanting to make that call they may be better off with a clean share tracker fund investing in a specific sector.
