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We took to the streets of San Francisco and asked people, "What is an ETF?" Here's what they had to say.

Top ETF Questions & Answers

  • What are the benefits of ETFs?

    They can help you grow your money. Over time, index ETFs have outperformed the average U.S. style box mutual fund in their associated investment categories3. For example, the flagship iShares Core S&P 500 ETF, IVV, has outperformed 88% of active mutual funds over a 10-year period.4

    They cost less than other investment  types. Generally, iShares ETFs cost about 1/3 as much as the typical mutual fund and have ½ of the average tax cost when compared to similar mutual funds.1

    iShares ETFs make it easy to invest your money in either broad market categories like the S&P 500, or in specialty or niche sectors with one simple trade.

  • Are ETFs actively managed?

    iShares ETFs are overseen by some of the most experienced portfolio managers in the industry. Most are index funds, meaning they seek to match the components of a market index. This differs from active funds, such as mutual funds, where the fund manager is attempting to "beat" the index in terms of performance. Index ETFs have been successful in outperforming the average U.S. style box actively managed mutual fund in their associated investment categories3.

  • How do you buy an ETF?

    There are two easy ways to purchase iShares ETFs:

    1) Talk to your advisor about adding iShares Funds to your financial plan.
    2) Purchase iShares Funds directly from any online brokerage account. Through Fidelity, many ETFs also trade commission-free.

  • How do you use ETFs in your portfolio?

    Many use ETFs to invest for the long term, such as saving for retirement or growing wealth.  Others take advantage of ETFs for shorter-term  goals, like generating a steady stream of income, or for  managing volatility.

Find out how iShares Funds Can Help You Keep More of What You Earn

The savings in fees and taxes by investing with iShares Funds can really add up. Learn more.

1Morningstar, as of 6/30/14. Comparison is between the average Prospectus Net Expense Ratio for the oldest share class of iShares ETFs (0.37%) and active Open-End Mutual Funds (1.12%) that are available in the U.S. and have 10 year track records (excluding municipal bond and money market funds).

"Tax cost" is a Morningstar measure of the impact of taxes on capital gains and income distributions on performance. The average tax cost of the iShares ETFs and active Open-End Mutual Funds included in the comparison = 0.53% and 1.05%, respectively.

2Shares of iShares Funds may be bought and sold throughout the day on the exchange through any brokerage account. However, shares may only be created or redeemed directly from the Fund by Authorized Participants-- typically large institutional investors--in very large creation/redemption units. When comparing stocks or bonds and iShares Funds, it should be remembered that management fees associated with fund investments, like iShares Funds, are not borne by investors in individual stocks or bonds.

3Morningstar Direct as of 9/30/2014.

4Source: Morningstar, as of 2/28/14. Post-tax comparison made between the returns at NAV of IVV and the oldest share class of all active Open-End Mutual Funds within the U.S. Large Cap Blend Morningstar category that were available in the U.S. at the beginning of the investment period. Returns assume the highest federal tax rate, but no state or local taxes, on distributions and assume that investors did not sell the funds at period end. If a Mutual Fund closed during the timeframe, it is assumed to have underperformed. Actual after-tax performance depends on an investor's tax situation and may differ from that shown. Performance may be different for other time periods.

Good to Know

iShares ETFs cost about 1/3 as much as the typical mutual fund and have 1/2 of the average tax cost when compared to similar mutual funds.1

Carefully consider the Funds' investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the Funds' prospectuses or, if available, the summary prospectuses, which may be obtained by visiting the iShares ETF and BlackRock Mutual Fund prospectus pages. Read the prospectus carefully before investing.

Investing involves risk, including possible loss of principal.

Investment comparisons are for illustrative purposes only. To better understand the similarities and differences between investments, including investment objectives, risks, fees and expenses, it is important to read the products' prospectuses.

Before engaging any broker-dealer or Fidelity, you should evaluate the overall fees and charges of the firm as well as the services provided. Fidelity and BlackRock have entered into a long-term marketing program that compensates Fidelity to promote iShares ETFs; as part of this agreement, Fidelity offers 65 iShares ETFs commission-free online for qualified buyers and sellers, including all Core ETFs. Additional information about this arrangement, including any compensation, is contained in the ETFs' registration statements. ETFs are subject to a short-term trading fee by Fidelity, if held less than 30 days. Other conditions and fees may apply. See Fidelity.com/commissions for details.  BlackRock is not affiliated with Fidelity or any of their affiliates.

For more information on the differences between ETFs and mutual funds, click here.

The Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).

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