Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.
ETF insights platform
Understand how ETFs can offer low-cost, tax-efficient market access.
Delve deeper into ETFs
Deepen your ETF expertise through comprehensive, use case-driven education designed to support more informed and effective portfolio decisions.
An ETF 101 for institutional investors
Our guide provides institutional investors with an in-depth understanding of ETFs, their history, and use cases across equity, bond, sustainable ETFs, commodity and cryptocurrency ETPs.
Index ETFs
Index ETFs are a type of investment that are designed to track the performance of a specific market index, such as the S&P 500, FTSE 100 or MSCI World Index, while trading on exchanges like a regular stock.
Index mutual funds
Index mutual funds are pooled investment vehicles managed by professional portfolio managers which are designed to replicate the performance of a specific market index. Mutual funds are bought and sold directly from the fund manager rather than via exchanges.
Active ETFs
Active ETFs are investment funds that are managed by professional portfolio managers who actively make decisions about which securities to buy, hold, or sell in order to outperform a specific benchmark or achieve a particular investment objective. They trade on stock exchanges, providing investors with the potential combined benefits of active management and exchange-traded funds.
Active mutual funds
Active mutual funds are a type of investment fund managed by professional portfolio managers who actively make decisions about which securities to buy, hold, or sell in order to outperform a specific benchmark index or achieve a particular investment objective. They are bought and sold directly with the fund manager.
Benefits of ETFs
Discover the key benefits of ETFs and why they can be an effective investment vehicle.
Diversification
ETFs offer broad, efficient market exposure and diversification in a single trade, aiming to help investors manage risk and pursue long-term goals.
Transparency
iShares ETFs disclose their portfolio composition daily, so iShares ETF shareholders know exactly what they own.
Access
ETFs provide access to diverse markets, asset classes and commodities, making it easier and more cost-effective for investors to reach hard-to-access markets.
Flexible
Unlike other types of investments, ETFs can be traded on stock exchanges, allowing investors more control.
Diversification and asset allocation may not fully protect you from market risk.
Managing risk
While risk cannot be eliminated, it can be managed through disciplined portfolio construction and investment strategies. Diversification across asset classes, sectors, and geographies can help reduce exposure to any single source of risk.
Additional approaches - such as active management, hedging techniques, and maintaining appropriate liquidity - can further support resilience. A well-structured portfolio aligned with investment objectives and risk tolerance can be key to navigating changing market conditions.
Diversification and asset allocation may not fully protect you from market risk.
Risk considerations
Investing involves risk, and the value of investments can go down as well as up. Investors should consider a range of risk factors when evaluating opportunities:
Tax
Tax treatment depends on individual circumstances and may change over time. Returns may be affected by current or future legislation, and different investment structures can carry tax implications.
Currency
Investments in assets denominated in foreign currencies are subject to exchange rate fluctuations.
Market risks
Market conditions, including economic developments, interest rate changes, geopolitical events, and investor sentiment, can affect asset prices.
Busting the five myths of ETFs
ETFs are often subject to misconceptions and commonly repeated inaccuracies. It is important to clearly distinguish what ETFs are and what they are not.
Reality: ETF prices are transparent, but that doesn’t make them more volatile.
The price of an ETF reflects the changing value of its underlying securities and the supply and demand of the ETF in the marketplace. The difference between an ETF and a mutual fund is that the price of a mutual fund, which similarly reflects the value of its underlying securities, is fixed once a day and only after the market closes, while ETF pricing changes throughout market hours in real time. This doesn’t mean that ETFs are more volatile – their price changes are just more visible.
Reality: Risk is driven by the assets you're investing in, not necessarily the vehicle used to access the assets.
Just like a mutual fund, the risk profile of an ETF is tied to its underlying holdings, or the assets it invests in: so a mutual fund and ETF that hold similar stocks or bonds will have similar risk profiles. For example, an international stock ETF or mutual fund may have higher risks than a U.S. investment grade corporate bond ETF. But that risk is not related to whether you choose to hold a mutual fund or an ETF.
On the flip side, an ETF offers greater diversification than an individual stock, which may help reduce risk in a portfolio.
Diversification and asset allocation may not fully protect you from market risk.
Reality: You can use ETFs for a wide range of exposures and outcomes.
ETFs are available across a wide range of exposures and investment strategies. They provide cost-efficient access to targeted markets, such as specific countries or sectors, as well as broad market benchmarks.
Combined with their typically high liquidity and ease of trading, ETFs enable investors to gain exposure to markets and asset classes that might otherwise be difficult or costly to access.
Whether seeking entry into less accessible international markets, establishing core portfolio allocations, or pursuing strategies designed to achieve specific investment outcomes, ETFs can serve as flexible and efficient building blocks within a diversified portfolio.
Reality: iShares ETFs offer a diverse set of solutions for income investing.
Generating income in a low-interest rate environment can be challenging. However, through exposures such as dividend-paying equities or fixed income securities, ETFs provide investors with a broad range of potential income-generating opportunities.
In addition, ETFs typically offer greater diversification than holding individual stocks or bonds, while often delivering this exposure at a lower cost than mutual funds.
Reality: ETFs are versatile investment vehicles appropriate for a wide range of investors.
While ETFs offer the same intraday trading flexibility as individual equities, making them useful tools for short-term tactical positioning, they are equally effective as cost-efficient building blocks for long-term, strategic portfolio construction.
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