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FAQs

  • 1. What are iShares?

    iShares are a family of exchange traded funds (ETFs) marketed and managed by BlackRock. iShares funds can be used by institutional and private investors. Each share represents a portfolio of stocks designed to reflect the returns of a specific index as closely as possible.

    iShares funds are a flexible mechanism for achieving the market exposure you are looking for at the moment you need it. The remarkable growth of iShares in recent years is a testament to the diverse uses of these funds in securing returns, managing risks and controlling costs.

    Certain types of investor may not be able to invest freely in all the funds contained in the iShares range. The regulatory structures governing specific jurisdictions may prevent investors from investing in iShares funds listed on exchanges in those jurisdictions.

  • 2. What are exchange traded funds (ETFs)?

    Exchange traded funds (ETFs) are open-ended collective investment schemes that are listed on stock exchanges. However, they differ from traditional collective investment schemes in some significant ways: ETFs can be traded throughout the day and are bought and sold like ordinary stocks through brokers or financial advisers during normal trading hours.

    The iShares fund family is one of the largest ranges of exchange traded funds, covering various indices and having listings on major stock exchanges around the world. First launched in 1990, ETFs are increasingly popular among institutional and private investors because of their diverse applications in building portfolios, implementing long and short investment strategies, controlling costs and risk, and pursuing trading strategies.

  • 3. Are all iShares index funds?

    Yes. Each iShares fund is designed to reflect the return of a specific market index. For example, the iShares Euro STOXX 50 fund aims to reflect the total return of the STOXX® Europe 50 index.

  • 4. What are the benefits of index investing?

    • Simplicity: indexing is easily understood and indexed portions of portfolios are highly transparent in terms of their holdings and investment style

     Low cost: index funds typically have low fees because index fund managers normally only trade when their benchmark indices change, and do not devote extensive resources to company research

     Diversification: index funds aim to reflect the performance of all the securities in an index and can therefore be used to reduce concentration risk in a portfolio by providing exposure to entire regions, markets or sections of markets

    All financial investments involve an element of risk. Therefore, the value of your investment and the income from it will vary and your initial investment amount cannot be guaranteed. Past performance is not a guide to future performance and should not be the sole factor of consideration when selecting a product. All financial investments involve an element of risk to both income and capital. ETFs see to track a benchmark and holdings are not altered in rising or falling markets. Emerging markets and commodity investments are associated with greater investment risk.

  • 5. Are iShares products long-term investments?

    iShares products are ideal tools for implementing a wide variety of long- and short-term investment objectives. For example, iShares products can be employed as core building blocks for long-term asset allocation, or used to implement short-term trading ideas.

  • 6. Can iShares ETFs and ETCs be bought on margin and sold short?

    iShares ETFs & ETCs trade as stocks, so all the things you might do with a stock - such as buying on margin, placing limit and stop orders - you can do with iShares. If you can buy on margin and sell securities short through your stockbroker, you can apply these trading techniques to all iShares products, including ETFs and ETCs.

  • 7. What products does iShares offer?

    iShares offers a range of exchange traded funds (ETFs) and a range of physically backed precious metal exchange traded commodities (ETCs).

    iShares ETFs are available around the world and offer precise exposure to a specific index. With iShares ETFs investors can gain access to individual countries, broad regional and global equity and fixed income indices, sectors, property, thematic and size-based indices. iShares ETFs are listed on exchanges across the World.

    For a full listing of the iShares products available to investors in your domicile please refer to the Funds Overview page.

    Certain types of investor may not be able to invest freely in all the products contained in the iShares range. The regulatory structures governing specific jurisdictions may prevent investors from investing in iShares listed on exchanges in those jurisdictions.

  • 8. Are there any load charges for buying and selling iShares?

    There are no front loads or redemption fees charged on the purchase or sale of iShares. However, customary brokerage charges do apply. By contrast, companies offering traditional collective investment schemes may apply load charges on the purchase or sale of shares/units in their vehicles, and may also operate short-term redemption policies under which additional fees are charged on redemption within a given time period after the purchase date.

  • 9. How do I buy and sell iShares?

    iShares products trade on stock exchanges in the same way as shares of publicly held companies. Investors can therefore buy and sell iShares ETFs and ETCs through their brokers or financial advisers in the same way that they buy or sell stocks. There is no need to open a separate trading account. iShares funds can be traded at any time during normal trading hours, using all the trading techniques applicable to stocks.

  • 10. Can iShares ETFs and ETCs be purchased or redeemed through BlackRock?

    No. iShares products cannot be purchased or redeemed through BlackRock. Instead, iShares products are bought and sold through stockbrokers, financial intermediaries and other financial organisations that allow customers to trade stocks.

  • 11. How do the management fees of iShares ETFs compare with those of traditional collective investment schemes?

    iShares ETFs’ annual management fees are substantially lower than those of many comparable collective investment schemes. Investors who trade regularly or are investing for the short-term should take into account that the purchase or sale of iShares ETFs will involve payment of brokerage commissions. However, where iShares ETFs are used as part of a long-term buy-and-hold strategy, the savings provided by iShares' low annual fees may offset these brokerage costs.

  • 12. Does an iShares ETF’s trading volume affect its pricing and liquidity?

    The liquidity of an iShares ETF does not depend upon its trading volume. Rather, an iShares fund's liquidity is determined by the liquidity of its underlying stocks. This is because of the way in which iShares ETFs are created and redeemed by market participants (large brokerage houses) in response to demand for iShares ETFs. As demand for iShares funds increases, the market participants create more iShares from the stocks featured in an iShares fund's benchmark index. As demand decreases, iShares are redeemed.

    iShares ETFs therefore remain highly liquid provided that the underlying stocks required to build them are liquid. The range of iShares market participants and the extent of their presence in global markets ensures that iShares have continual access to some of the world's largest inventories of stocks.

  • 13. Can I reinvest dividends earned by my iShares ETFs?

    Just like traditional stocks, most iShares ETFs distribute dividends as cash payments to the brokerage accounts holding iShares. The way in which the dividends you receive from iShares funds are treated will depend upon your existing agreement with your broker dealer. If your broker dealer offers a dividend reinvestment plan (DRIP), you may be able to reinvest dividends from iShares funds as part of that programme.

  • 14. Are iShares funds guaranteed or insured?

    iShares funds do not offer guaranteed returns, and the value of investments in iShares funds may be worth more or less than the amount originally invested.

    The market participants operating in the iShares primary market are well-capitalised institutions that are subject to close regulatory scrutiny.

  • 15. Why invest internationally?

    As the world’s economies and markets become more developed and interconnected, it increasingly makes sense to invest a portion of a portfolio in international equities:

     Expanding investment opportunities: the fastest areas of economic growth and the highest returns won’t always be found in your home market. Expanding the scope of a portfolio to include international investments dramatically widens the investment opportunities available
    Ease of access: vehicles such as exchange traded funds provide highly diversified access to international equities, so investors do not necessarily need to be experts in individual stocks before they venture into international investment
    Cost: it is no longer prohibitively expensive to invest in many international equities. iShares funds provide some of the lowest-cost access to international equities available

    Many investors already invest internationally because they hold stocks that make a significant portion of their profits from exports to other countries. However, establishing international holdings through vehicles such as iShares funds makes it much easier for investors to keep track of the extent and diversification of their international holdings.

  • 16. How can I use iShares funds?

    The uses of iShares funds are growing all the time as institutional and private investors discover how these flexible tools can be applied to their own investment needs. The most common uses of iShares funds are:

    • Achieving diversified, cost-effective access to global markets
    Putting short-term cash positions to work in the equity and bond markets
    Implementing asset allocation views
    Building core-satellite portfolios
    Managing risks and costs
    Implementing trading strategies
    Hedging exposure and taking short positions

    As an investor, you should be aware that the use of derivatives and short positions may involve the loss of all the money you invested and you may have to pay more.

  • 17. How do iShares ETFs compare to traditional collective investment schemes?

    The following chart outlines the key differences between iShares funds and traditional collective investment schemes.

     

    iShares

    Traditional collective investment scheme

    Pricing

    Throughout trading hours

    Typically

    once per day

    Accessibility

    Most brokers

    Through banks, financial advisers or directly from fund management houses

    Transaction costs

    Low: includes brokerage fee, stamp duty and transaction levy

    Varies: may involve front-end or redemption fee in addition to bid-offer spread

    Portfolio turnover

    Very low -- leading to lower transaction and market impact costs

    Varies considerably according to manager style (high turnover leads to high transaction costs, which may reduce potential for performance)

    Marginable (ability to leverage)

    Yes: standard security margin rules apply

    No

    Disclosure of portfolio holdings

    High: full holdings disclosed daily to market participants and the public

    Low: holdings typically disclosed semi-annually

     


    As an investor, you should be aware that the use of derivatives may involve the loss of all the money you invested and you may have to pay more later.

  • 18. What are fixed income iShares?

    Fixed income iShares funds are portfolios of bonds that trade on stock exchanges, can be bought and sold through a wide variety of brokers and are available to institutional and private investors.

    In short, fixed income iShares ETFs are a flexible mechanism for achieving the market exposure you need, at the level you want, at the moment you need it. Fixed income iShares ETFs also provide investors with intra-day pricing of their bond portfolios. When compared with traditional bond funds, iShares funds allow investors to take a more active approach to managing the fixed income portion of their portfolio in a cost-effective way while maintaining broad diversification.

  • 19. How often do fixed income iShares funds distribute dividends?

    Fixed income iShares funds follow distribution schedules that are consistent with those of traditional bond collective investment schemes. For full details of specific fund distribution dates, please refer to the Fund Overview page.

  • 20. Why use indexing for bonds when active bond funds generally provide better performance?

    The arguments for using indexing apply equally to fixed income and equity investment:

     Simplicity: indexing is easily understood and indexed portions of portfolios are highly transparent in terms of their holdings and investment style
    Low cost: index funds typically have lower transaction costs than active funds because index fund managers only trade when their benchmark indices change and do not devote extensive resources to market and stock research
    Diversification: index funds aim to reflect the performance of all the securities in an index and can therefore be used to reduce concentration risk in a portfolio by providing exposure to entire regions, markets, and sectors
    Performance and risk: on average, index investors will achieve performance before fees that is in line with the index. After fees, index investors are likely to outperform the average active manager over the long term while assuming less risk

    All investments involve an element of risk to both income and capital. Performance is not guaranteed.  Past performance may not necessarily be repeated and is no guide to future returns.

  • 21. What are the advantages of iShares funds?

    The key benefits of investing in iShares funds are:

     Ease of trading: iShares funds are bought and sold through a wide variety of brokers
    Continuous real-time quotes and trading: iShares funds trade throughout regular market hours
    No sales fees or redemption charges: iShares funds are bought and sold on exchange, so only customary exchange transaction charges, including brokerage commissions, apply
    Low fund expenses: iShares funds typically have much lower total expense ratios than comparable collective investment schemes
    Transparency: iShares ETFs disclose their fund holdings daily, so shareholders know exactly what they own
    Diversification: iShares funds reflect the performance of all the securities in an index and can therefore be used to reduce concentration risk in a portfolio by providing exposure to entire regions, markets and sectors
    High liquidity: the liquidity of an iShares fund is determined by the liquidity of its underlying constituents, not the trading volume and market capitalisation of the iShares fund in the secondary market

    All financial investments involve an element of risk. Therefore, the value of your investment and the income from it will vary and your initial investment amount cannot be guaranteed. Past performance is not a guide to future performance and should not be the sole factor of consideration when selecting a product.

  • 22. Why do iShares funds’ total returns sometimes differ from the total return of their benchmark indices?

    iShares funds are designed to produce total returns in line with the total returns of their benchmark indices (capital and income returns). However, all index funds tend to experience a degree of tracking error - the difference between the fund's return (and therefore price) and the index return. The main causes of tracking error in iShares are:

    Fees: iShares funds charge a low annual management fee which is drawn directly from the fund, thus reducing the value of the fund
    •Trading costs: index funds have low levels of trading relative to active funds, but they still need to trade - for example to reflect changes in indices - and this activity generates costs which affect the value of a fund
    • Withholding taxes suffered by the fund

  • 23. How is the market price of an iShares ETF determined?

    The market price of an iShares fund is approximately equal to the market value of the securities held in the fund plus any undistributed net income. An iShares fund's market price is therefore close to the fund's net asset value (NAV). Any divergence between the market price of an iShares fund and the NAV of its underlying constituents would normally trigger arbitrage activities by iShares market participants that moves the market price back towards NAV.

  • 24. Why invest in fixed income products?

    Fixed income products are often used as key components in diversified portfolios. For example, as part of a portfolio consisting primarily of equities, they can provide a measure of risk control because they are usually less volatile than equities and may be less likely to rise and fall in value at the same time as equity investments. Investors who require regular income from their portfolios often use fixed income products to produce a regular stream of dividends. Fixed income iShares funds enable investors to diversify their fixed income risk across a large group of bonds by purchasing an entire basket of bonds with the same ease as buying a single stock.

    Investors should note investment in corporate bonds brings an increased risk of default on repayment which may affect the capital value of the fund.

  • 25. Are iShares for institutional or private investors?

    Both. Private and institutional investors are increasingly making use of iShares funds to:

    • Implement investment strategies quickly and easily
    • Control risks in their portfolios
    • Reduce costs

    Private investors will find that iShares funds are as easy to trade as any other major share, while providing diversified exposure to a market or sector. One of the main uses of iShares funds for private and institutional investors is as low-cost building blocks for long-term core positions in their portfolios

  • 26. Are currency fluctuations hedged within the fund?

    No. Currency risk will constitute an element of portfolio returns. However, iShares does have a range of currency hedged ETFs offering exposure to core indices.

  • 27. What is the difference between exchange traded funds and iShares?

    None. iShares is the brand name of a family of products, predominately ETFs and also including precious metal physically-backed ETCs, marketed by BlackRock.

  • 28. Does BlackRock intend to launch iShares funds that aim to outperform indices?

    All the iShares funds currently in use are designed to reflect the total returns of their benchmark indices. BlackRock has researched the feasibility of exchange traded funds that aim to outperform indices and may consider launching iShares funds of this kind if suitable opportunities arise.

  • 29. Do iShares funds distribute dividends?

    Yes. Dividends are distributed to iShares holders directly or through their brokers on the payment dates relevant to each fund. Payment dates may be monthly, quarterly, half yearly, or annual. Full details of payment dates are given on the iShares fund fact sheets.

  • 30. What are the underlying investments used in iShares?

    The underlying investments in iShares funds consist of stock representing the funds' benchmark indices. iShares funds may also use futures to help achieve market exposure, facilitate trading and reduce transaction costs. For the complete list of holdings in an iShares fund, please refer to the Fund Overview page on this site.

  • 31. How do fixed income iShares ETFs compare with traditional bond collective investment schemes?

    One of the key advantages of fixed income iShares ETFs over traditional bond funds is that iShares funds can be bought and sold whenever the stock exchanges on which they are listed are open. To make this possible, fixed income iShares ETFs use real-time intraday pricing. In the case of European-listed fixed income iShares ETFs, pricing is consensus pricing provided by a consortium of market makers through iBoxx, not the pricing of a single index provider. Other key advantages offered by fixed income ETFs include:

    - Cost control through low annual fees;
    - High transparency through disclosure of holdings;
    - Ability to take long or short positions; and
    - Risk control through broad diversification.

    As an investor, you should be aware that short positions may involve the loss of all the money you invested and you may have to pay more later. Investors should note investment in corporate bonds brings an increased risk of default on repayment which may affect the capital value of the fund.

  • 32. What exactly will I own when holding an iShares ETF?

    You will own equity securities issued by iShares PLC, iShares II PLC, iShares III PLC, iShares IV PLC  iShares V PL, iShares VI PLC, or iShares VII Plc . The return on these securities will reflect the return on a basket of securities owned by iShares PLC, iShares II PLC, iShares III PLC, iShares IV PLC iShares V PLC,  iShares VI PLC, or iShares VII PLC.

  • 33. What are the costs involved in buying shares or securities in iShares products?

    The costs involved in buying shares or securities in iShares ETFs and ETCs are the same as those that apply when buying any other share or security. Broker commissions will therefore normally be paid and iShares products will be subject to bid-ask spreads. There is no Stamp Duty payable on the purchase of iShares products on the London Stock Exchange. Unlike some traditional collective investment schemes, iShares products do not charge front-end loads or redeem payments. During ownership of shares or securities in an iShares product an annual management fee is charged, the value of which is deducted from the iShares product on a daily basis.

  • 34. What is iNAV and how do I use it?

    iNAV, the indicative net asset value of an exchange traded fund, enables investors to compare the quotes they receive from brokers with an up-to-the-minute approximation of the net asset value of an iShares fund. iNAVs bring a level of transparency and comparability to iShares funds that is almost unknown among traditional collective investment schemes, which typically calculate their net asset value once per day. iNAVs are calculated at least once every minute using the market prices of the underlying constituents in a fund and other liquid assets accrued in the fund. iNAVs for European-listed iShares are available on Reuters and Bloomberg. For details of specific iNAV codes, please refer to the fund performance pages or fund factsheets.