BlackRock expands iShares FactorSelect smart beta suite with emerging markets ETF

Dec 16th, 2015 | By | Category: Equities

BlackRock, the parent of the exchange-traded funds giant iShares, has expanded its iShares FactorSelect ETF product suite with the introduction of an emerging markets-focused smart beta ETF.

BlackRock expands iShares FactorSelect smart beta suite with emerging markets ETF

BlackRock has expanded the iShares FactorSelect smart beta suite with the launch of an emerging markets ETF

The iShares FactorSelect MSCI Emerging ETF (EMGF) is designed for investors seeking outperformance from their emerging market equity exposure; the fund employs a multi-factor approach, focusing on four historically proven drivers of returns: financially healthy companies (quality), inexpensive stocks (value), trending stocks (momentum), and smaller companies (size).

Multi-factor indices take advantage of the low historical correlations between factors to reduce overall volatility. “The iShares FactorSelect ETF suite enables investors to seek the potential performance and diversification benefits offered by four well known investment factors in an easy and cost efficient way. With the launch of EMGF we have rounded out the suite, giving US investors the added flexibility to choose multi-factor exposures across domestic, international and/or emerging markets,” said Robert Nestor, Managing Director and Head of iShares Smart Beta Strategy at BlackRock.

The multi-factor ETF aims to track the MSCI Emerging Market Diversified Multiple-Factor Index, which seeks to maximize exposure to these four ‘factors’, while maintaining a similar level of risk to a broad emerging market index.

The MSCI index uses a methodology which scores each constituent of the parent index on indicators of quality (based on high percentage of company earnings allocated to shareholders, low levels of debt and low earnings variability), value (using ratios of price to fundamental value), momentum (based on share price outperformance of recent periods) and size (favouring lower market capitalisation companies).

Obtaining exposure to these factors can potentially lead to levels of portfolio risk which may not be tolerated by some investors. To counteract this, MSCI use an optimisation technique to maximize the factor exposures while looking to keep total risk in line with that of the market.

The fund has been listed on the BATS ETF Marketplace and carries a 0.65% net expense ratio. With the launch of EMGF, the iShares FactorSelect ETF suite is now comprised of the following products:  

iShares FactorSelect MSCI Emerging ETF (BATS: EMGF)

iShares FactorSelect MSCI USA ETF (NYSEArca: LRGF)

iShares FactorSelect MSCI USA Small-Cap ETF (NYSEArca: SMLF)

iShares FactorSelect MSCI International ETF (NYSEArca: INTF)

iShares FactorSelect MSCI Intl Small-Cap ETF (NYSEArca: ISCF)

iShares FactorSelect MSCI Global ETF (NYSEArca: ACWF)

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