BlackRock adds four iShares ETFs to US equity sector range

Mar 23rd, 2017 | By | Category: Equities

BlackRock, the world’s largest asset management firm, has launched four new iShares ETFs on London Stock Exchange, building out their range of US equity sector funds. The new ETFs will target S&P 500 constituents in the consumer staples, industrials, materials and utility sectors.

Blackrock adds four iShares ETFs to US equity sector range

The new ETFs track consumer staples, industrials, materials and utilities stocks in the S&P 500.

Each ETF tracks an S&P Dow Jones Index that selects S&P 500 constituents which operate within a specified sector, as defined by the Global Industry Classification Standard.

The launches bring the total number of iShares US sector funds to nine, following the launch of ETFs tracking the consumer discretionary, energy, financials, healthcare and information technology sectors in November 2015.

Tom Fekete, Global Head of iShares Product at BlackRock, said, “These funds are the result of a number of conversations we had with clients wanting more granular ways to implement their views on the US equity market rally within portfolios.”

Sectors typically follow distinct cyclical patterns meaning they can perform very differently to each other depending on the current stage of the economic cycle. Sector ETFs can provide asset allocation opportunities for investors who are interested in using building blocks at sector level, or expressing a view on the macro environment in a more diversified way than single stock investments.

“Investors who believe the US economy is in an expansion phase may look to seek exposure to sectors that exhibit the highest beta relative to the broader market,” said Fekete. “Those investors who believe the economy is in a contractionary phase, meanwhile, may look to allocate to sectors with lower correlation and lower levels of volatility to the broader market.

“Whichever side they are on, investors now have more tools with which to tilt their portfolios in line with their outlook for the US economy.”

The new ETFs, along with their ticker codes, are listed below:
iShares S&P 500 Consumer Staples UCITS ETF (LON: IUCS)
iShares S&P 500 Industrials UCITS ETF (LON: IUIS)
iShares S&P 500 Materials UCITS ETF (LON: IUMS)
iShares S&P 500 Utilities UCITS ETF (LON: IUUS)

The funds join the existing suite of US sector equity ETFs which include:
iShares S&P 500 Consumer Discretionary Sector UCITS ETF (LON: IUCD)
iShares S&P 500 Energy Sector UCITS ETF (LON: IUES)
iShares S&P 500 Financials Sector UCITS ETF (LON: IUFS)
iShares S&P 500 Health Care Sector UCITS ETF (LON: IUHC)
iShares S&P 500 Information Technology Sector ETF (LON: IUIT)

All the funds in the suite are physically replicating with total expense ratios of 0.15%.

Since the start of the year, US equity ETFs have gained $71 billion of net inflows, of which $13bn has gone into sector-specific ETFs. The five existing S&P sector ETFs in the iShares range have over $1.1bn AUM, the largest by some distance being the financials sector ETF with $838 million.

As of 21st March, the best-performing sector in the S&P 500 in 2017 has been information technology which has gained 10.4%, followed by health care which is up 8.1%. The worst performer is energy, down 8.5%, while the S&P 500 has returned 4.7% over the same period.

US sector exposure can also be found using ETFs offered by SPDR and Source. The SPDR S&P 500 US Select Sector UCITS ETF series tracks the same sector indices as the iShares ETFs and have combined AUM of $870m, with each ETF having a TER of 0.15%.

The Source S&P 500 US Select Sector UCITS ETF series also tracks the S&P 500 sectors, but imposes a cap of 20% for any single issuer. The Source sector ETFs have combined AUM of $2.2bn with each ETF having a management fee of 0.30%.

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