Exchange traded funds have become increasingly popular with all types of investors. While these versatile vehicles come in many “models,” their underlying mechanics are essentially the same. Here’s a look at how they’re structured and trade in the markets.
Jan 13, 2016
If you follow your investments closely, it’s important to understand the different prices and values listed for exchange traded funds.
It’s been said that liquidity is like oxygen: you only notice it when it’s gone. ETFs are generally liquid, and they can also play a role in restoring supply and demand in turbulent markets. However, there's no guarantee that an active market for shares of any ETF will develop or be maintained.
The belief that frequent trading of ETFs during a market downturn may trigger steeper losses is upside-down. In fact, ETF transparency may actually curb market uncertainty.
Bond ETFs, which trade on an exchange just like stock ETFs, have made it easier and less costly for investors to access virtually every sector of the bond markets. Learn more on bond ETFs.
For investors looking to potentially generate incremental yield, it is possible to both lend shares of ETFs and lend out the underlying securities of an ETF. Learn more about securities lending and ETFs.
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 Fund and BlackRock Fund prospectus pages. Read the prospectus carefully before investing.
Investing involves risk, including possible loss of principal.
Shares of the iShares Funds may be bought and sold throughout the day on the exchange through any brokerage account. Shares are not individually redeemable from the Fund, however, Shares may be redeemed directly from a Fund by Authorized Participants, in very large creation/redemption units.
There can be no assurance that an active trading market for shares of an ETF will develop or be maintained.
There is no guarantee that there will be borrower demand for shares of the iShares Funds, or that securities lending will generate any level of income. Distributions paid out of the Fund’s net investment income, including income from securities lending, if any, are taxable to investors as ordinary income.
The Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).
©2018 BlackRock, Inc. All rights reserved. BLACKROCK, BLACKROCK SOLUTIONS, BUILD ON BLACKROCK, ALADDIN, iSHARES, iBONDS, iSHARES CONNECT, FUND FRENZY, LIFEPATH, SO WHAT DO I DO WITH MY MONEY, INVESTING FOR A NEW WORLD, BUILT FOR THESE TIMES, the iShares Core Graphic, CoRI and the CoRI logo are registered and unregistered trademarks of BlackRock, Inc., or its subsidiaries in the United States and elsewhere. All other marks are the property of their respective owners.
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