A new way to invest:
iShares smart beta ETFs

Smart beta ETFs provide investors with the ability to access factors in a simple and transparent investment vehicle

What is smart beta?

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    In our pockets, we now hold the ability to summon a car, monitor our health, and make a restaurant reservation. Advances in data and technology are driving innovation, bringing scale to reduce cost, and transforming our lives.

    But, how is this relevant to our investments?

    We’ve learned from painful experiences that traditional ways of investing might not have truly protected us. And it’s hard to select investments.

    We need a new way. Factor investing can help.

    Powered by data and technology, coupled with fundamental investment ideas, that new way of investing may be here. But what are factors?

    As long as there have been markets, investors have bought cheap, trending, high quality, small, and lower risk stocks. These simple strategies are what we now call factor investing.

    Factors are to securities what nutrients are to food. For example, just as milk contains fats and protein that contribute to its nutritional value, a stock might have value and momentum attributes that drive its returns.

    And just as people have different nutritional needs, investors may need different factor exposures. Nutrients power you; factors power your portfolio.

    Factors aren’t new. They have been around for decades and are grounded in rigorous, Nobel-prize winning research, but were primarily available through actively managed mutual funds.

    The innovation is not the investment ideas themselves. It’s in the way we access those investment ideas.

    Smart Beta Exchange Traded Funds capture the power of factors and deliver it in cost-efficient ETFs, revolutionizing the way investors access these rewarded investment ideas.

    Smart Beta is here to stay. Smart Beta. A new way.

Smart Beta - Themes | iShares - BlackRock

  • Factors – are present in all portfolios
  • Factors are not new. Academic research since the 1930s has systematically identified factors as a driver of returns within and across asset classes, as well as across markets and countries. Did you know that 6 Nobel prizes have been awarded to factor investing?1
  • What is new is the way we access these investment ideas, such as through smart beta exchange traded funds (ETFs). Smart beta ETFs provide investors with the ability to access factors in a simple and transparent investment vehicle.

1Source: Nobel Prize. Nobel prizes were awarded in 1981, 1990, 1997, 2013, 2017, 2017. The value of investments can go down as well as up.

What’s in the pipeline for smart beta?

A recent survey of UK financial advisers revealed that over a half expect the use of smart beta ETFs to rise. Click on our latest infographic to discover the reasons why.

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How can you use smart beta?

  • Seek reduced volatility: Minimum volatility ETFs provide investors with the ability to remain fully invested in the equity markets, while seeking lower levels of volatility than the broad market.
  • Seek enhanced returns: Single and multifactor ETFs provide investors with access factors, which have been associated with driving long-term performance.

Explore iShares smart beta ETFs

Smart Beta StrategyWhat does it do?Example Products
Minimum Volatility Targets stocks that exhibit a lower level of volatility than their peers. MVOL, SPMV, EMMVMVEU
Multifactor Seeks to provide diversified exposure to a variety of factors that have been identified as drivers of long-term performance: momentum, quality, size and value. IFSW, IFSUIFSE
Single Factor Targets exposure to a factor that has been a long-term driver of returns, such as momentum, quality, size and value. IWVL, IUVL, IWMO, IWQUIWSZ

View all Smart Beta ETFs

Minimum volatility funds

The funds should not be considered low risk in absolute terms and may not be suitable for cautious investors. While the indices tracked by these funds have been designed with the aim of reducing risk, there are no guarantees they will attain a more conservative level of risk than their respective major stock market index.

Factor focus ETFs

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.

Capital Risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. You may not get back the amount originally invested.

 

What’s on the horizon for
factor investing?

Find out how to navigate the universe with Chris Peel, CIO at Tavistock Wealth, who discusses how he has been using multi-factor and single factor smart beta strategies to remain fully invested in the equity markets, while seeking improved portfolio outcomes.

Explore smart beta use cases