MARKET OUTLOOK
Fund football: who makes your starting XI?
If ETFs were football players, what would our line-up look like?
June 2018

Capital at Risk: 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.

The opinions expressed are as of 12 June 2018 and are subject to change at any time due to changes in market or economic conditions.

The world’s biggest football tournament is finally underway.  Our experts are contemplating the big question: if ETFs were football players, what would our line-up look like?

Scroll down for the full explanation of all the fund risks mentioned.

The iShares Starting XI

Click the shirts for more
information and key risks of
each fund

Benched

They may not have made the cut, but impact subs can change the game at the drop of a hat.

iShares $ Ultrashort Bond UCITS ETF
Consistency is a necessity between the sticks, and this player has the potential to be a match-saver when the going gets tough.

Key risks:
  • Counterparty Risk
  • Credit Risk
  • Liquidity Risk
X
iShares $ Treasury Bond 1-3yr UCITS ETF
A choice who pops up with the occasional goal. The front end of the US yield curve has begun to offer income that can compete for capital.

Key risks:
  • Concentration Risk
  • Counterparty Risk
  • Credit Risk
  • Liquidity Risk
X
iShares Physical Gold ETC
A strong end to the season has boosted this player’s popularity and it has slotted in the starting 11, bolstered by the diversification prospects. Can also play up front if the game takes a turn.

Key risks:
  • Gold Risk
X
iShares $ TIPS 0-5 UCITS ETF
An authoritative marshal in the current environment, looks to be getting into its stride over the next year or two.

Key risks:
  • Counterparty Risk
  • Credit Risk
  • Liquidity Risk
X
iShares Automation & Robotics UCITS ETF
A versatile winger who excels going forward, with an eye on the fundamentals of the game. The position has become increasingly popular in tactical formations over the past couple of seasons.

Key risks:
  • Concentration Risk
  • Counterparty Risk
  • Derivatives Risk
  • Emerging Markets Risk
  • Equity Risk
  • Investment in Technology Securities Risk
  • Liquidity Risk
  • Non-Investment Grade Risk
  • Smaller Companies Risk
X
iShares Edge MSCI USA Quality Factor UCITS ETF
A quality player is needed to anchor the squad, and this player looks to shore up the core. Covers the defence well while setting play up for the attackers.

Key risks:
  • Concentration Risk
  • Equity Risk
  • Factor Focus Risk
  • Index Methodology Risk
X
iShares J.P. Morgan $ EM Bond UCITS ETF
Starting to come back into form following a below-par start to the season. A rotten run of luck lost some supporters, but looks well-positioned going into the tournament.

Key risks:
  • Counterparty Risk
  • Credit Risk
  • Currency Risk
  • Derivatives Risk
  • Emerging Markets Risk
  • Liquidity Risk
X
iShares S&P 500 Information Technology Sector UCITS ETF
The maestro of the team, loves to be in the spotlight. A mid-season dip across the league has done little to dent prospects, which have been boosted by some domestic support.

Key risks:
  • Concentration Risk
  • Counterparty Risk
  • Equity Risk
  • Investment in Technology Securities Risk
X
iShares Core S&P 500 UCITS ETF
One of the first names on the teamsheet as this player has really been earning its keep so far this year. A potent attacking force, and doesn’t look to be overvalued in the current transfer market.

Key risks:
  • Counterparty Risk
  • Equity Risk
X
iShares MSCI EM UCITS ETF
A little bit of flair is always a good thing in the starting eleven, and while this player might not have hit its stride just yet, it is a strike force to be reckoned with.

Key risks:
  • Currency Risk
  • Derivatives Risk
  • Emerging Markets Risk
  • Equity Risk
  • Liquidity Risk
X
iShares Edge MSCI USA Momentum Factor UCITS ETF
This player just keeps going and going. Links up well with the right side of midfield, resulting in a cracking attacking force.

Key risks:
  • Concentration Risk
  • Equity Risk
  • Factor Focus Risk
  • Index Methodology Risk
X
iShares Edge MSCI USA Value Factor UCITS ETF
Not the fanciest of players, but will pull its weight when the going gets tough. A long term prospect.

Key risks:
  • Concentration Risk
  • Equity Risk
  • Factor Focus Risk
  • Index Methodology Risk
X
iShares S&P 500 Financials Sector UCITS ETF
Unlucky not to make the starting 11. Offers a lot going forward, especially in the current environment. Has also benefitted from domestic support this year.

Key risks:
  • Concentration Risk
  • Counterparty Risk
  • Equity Risk
X
iShares MSCI Brazil UCITS ETF
Improved consistently over the last year and has made some structural changes to its game that offers good growth prospects going forward.

Key risks:
  • Concentration Risk
  • Currency Risk
  • Derivatives Risk
  • Emerging Markets Risk
  • Equity Risk
  • Liquidity Risk
X

The season refers to the period 1 January 2018-11 June 2018. Last season refers to the calendar year 1 January 2017-31 December 2017.

This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any financial instrument or product or to adopt any investment strategy.

Fund risks

Concentration Risk: Investment risk is concentrated in specific sectors, countries, currencies or companies. This means the Fund is more sensitive to any localised economic, market, political or regulatory events.

Counterparty Risk: The insolvency of any institutions providing services such as safekeeping of assets or acting as counterparty to derivatives or other instruments, may expose the Share Class to financial loss.

Credit Risk: The issuer of a financial asset held within the Fund may not pay income or repay capital to the Fund when due. If a financial institution is unable to meet its financial obligations, its financial assets may be subject to a write down in value or converted (i.e. “bail-in”) by relevant authorities to rescue the institution.
Currency Risk: The Fund invests in other currencies. Changes in exchange rates will therefore affect the value of the investment.

Derivatives Risk: Derivatives are highly sensitive to changes in the value of the asset on which they are based and can increase the size of losses and gains, resulting in greater fluctuations in the value of the Fund. The impact to the Fund can be greater where derivatives are used in an extensive or complex way.

Emerging Markets Risk: Emerging markets are generally more sensitive to economic and political conditions than developed markets. Other factors include greater 'Liquidity Risk', restrictions on investment or transfer of assets and failed/delayed delivery of securities or payments to the Fund.

Equity Risk: The value of equities and equity-related securities can be affected by daily stock market movements. Other influential factors include political, economic news, company earnings and significant corporate events.

Factor Focus Risk: Indices with a factor focus are less diversified than their parent index because they have predominant exposure to a single factor rather than the multiple factor exposure of most indices. Therefore they will be more exposed to factor related market movements. Investors should consider this fund as part of a broader investment strategy.

Gold Risk: The value of gold may be subject to substantial fluctuations. Factors such as supply and demand, localised economic, political or environmental events, transportation, customs and fiscal restrictions may impact the value of gold.

Index Methodology Risk: Although the Benchmark Index was created to select securities within the Parent Index for their recent price increases on the assumption that such increases will continue, there is no guarantee this objective will be achieved.

Investment in Technology Securities Risk: Investments in the technology securities are subject to absence or loss of intellectual property protections, rapid changes in technology, government regulation and competition.

Liquidity Risk: Lower liquidity means there are insufficient buyers or sellers to allow the Fund to sell or buy investments readily.Non-Investment Grade Risk: Non-investment grade fixed income securities are more sensitive to changes in interest rates and present greater ‘Credit Risk’ than higher rated fixed income securities.

Smaller Companies Risk: Shares in smaller companies typically trade in less volume and experience greater price variations than larger companies.

Index Disclaimers
The Markit iBoxx USD Liquid Investment Grade Ultrashort Index referenced herein is the property of Markit Indices Limited and is used under license. The iShares ETF is not sponsored, endorsed, or promoted by Markit Indices Limited.

The ICE Index mentioned in this document is a service mark of Interactive Data Pricing and Reference Data, LLC or its affiliates (“Interactive Data”) and has been licensed for use by BlackRock, Inc. in connection with the fund. Neither BlackRock, Inc. nor the fund is sponsored, endorsed, sold or promoted by Interactive Data. Interactive Data makes no representations or warranties regarding BlackRock, Inc. or the fund or the ability of the fund to track the applicable Index. INTERACTIVE DATA MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE ICE INDEX OR ANY DATA INCLUDED THEREIN. IN NO EVENT SHALL INTERACTIVE DATA HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, DIRECT, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS) EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

"J.P. Morgan" and "J.P. Morgan EMBISM Global Core Index" are trademarks of JPMorgan Chase & Co. licensed for use for certain purposes by BlackRock Institutional Trust Company, N.A. ("BTC"). iShares® is a registered trademark of BTC.J.P. Morgan is the Index Provider for the Underlying Index. J.P. Morgan is not affiliated with the Fund, BFA, State Street, the Distributor or any of their respective affiliates.

J.P. Morgan provides financial, economic and investment information to the financial community. J.P. Morgan calculates and maintains the J.P. Morgan EMBISM Global Core Index, J.P. Morgan Emerging Markets Bond Index Plus, J.P. Morgan Emerging Markets Bond Index Global and Emerging Markets Bond Index Global Diversified. Security additions and deletions into the emerging markets bond indexes do not in any way reflect an opinion in the investment merits of the security.

iShares funds are not sponsored, endorsed, or promoted by MSCI, and MSCI bears no liability with respect to any such funds or any index on which such funds are based. The Prospectus contains a more detailed description of the limited relationship that MSCI has with BlackRock and any related funds.

The Index is a product of S&P Dow Jones Indices LLC, a division of S&P Global, or its affiliates (“SPDJI”) and has been licensed for use by BlackRock. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC, a division of S&P Global (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by BlackRock. The iShares ETFs are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the Index.

iSTOXX® FactSet Automation & Robotics Index is the intellectual property (including registered trademarks) of STOXX Limited, Zurich, Switzerland (“STOXX”), Deutsche Börse Group or their licensors, which is used under license. The iShares ETF is neither sponsored nor promoted, distributed or in any other manner supported by STOXX, Deutsche Börse Group or their licensors, research partners or data providers and STOXX, Deutsche Börse Group and their licensors, research partners or data providers do not give any warranty, and exclude any liability (whether in negligence or otherwise) with respect thereto generally or specifically in relation to any errors, omissions or interruptions in the relevant index or its data.

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