Are ETFs Right For You?

Many individuals are turning to exchange traded funds (ETFs) for diversified, low-cost and tax efficient investing. Discover how ETFs can help you keep more of what you earn in 5 easy questions.

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How do you approach a new investment opportunity?

With a healthy dose
of skepticism.

With excitement about the opportunities it offers.

ETFs have been trading for more than 20 years and are typically managed by the same companies that manage mutual funds. Just like a mutual fund, the investment risk of an ETF is tied to its holdings. Put another way, a mutual fund and an ETF that hold similar stocks or bonds will have similar risk profiles. ETFs are the fastest growing vehicle at the core of investors' portfolios. (Source: Online survey conducted for BlackRock by research firm Market Strategies International in May 2014, polling 531 investors who use ETFs and have $100K+ in investable assets, and 260 financial advisors with $50M+ in assets.) Read more >

ETFs allow you to go one step further in building your own hand-picked portfolio without having to comb through individual stocks. Just like a mutual fund, the investment risk of an ETF is tied to its holdings. Put another way, a mutual fund and an ETF that hold similar stocks or bonds will have similar risk profiles.Read more >

Just like a mutual fund, the investment risk of an ETF is tied to its holdings. Put another way, a mutual fund and an ETF that hold similar stocks or bonds will have similar risk profiles.

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GOOD TO KNOW

iShares is backed by BlackRock, the world's largest investment manager, trusted to manage more money for investors than any other investment firm in the world. (Source: Based on $4.525T in AUM as of 9/30/2014) Source

When would you like to reap the benefits of your investments?

I'm trying to reach short-term goals.

I'm in it for
the long haul.

Because they trade like stocks, ETFs offer the flexibility you need to move in and out of investments as you like. ETFs trade at market prices that change throughout the day, while the price of a mutual fund is set at the day’s end. Many investors consider this ETF feature beneficial since it provides more flexibility in buying or selling funds. For long-term investments, however, it should make little difference. Read more >

While you can trade ETFs throughout the day, you don't have to. In fact, most investors don't. ETFs trade at market prices that change throughout the day, while the price of a mutual fund is set at the day’s end. Many investors consider this ETF feature beneficial since it provides more flexibility in buying or selling funds. For long-term investments, however, it should make little difference. Read more >

ETFs trade at market prices that change throughout the day, while the price of a mutual fund is set at the day’s end. Many investors consider this ETF feature beneficial since it provides more flexibility in buying or selling funds. For long-term investments, however, it should make little difference.

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GOOD TO KNOW

ETFs are bought and sold throughout the day, so you can immediately act on global news whenever the market is open.

What would you like to add to your portfolio?

More traditional markets,
like the S&P 500.

More specific sectors
or specialty funds.

Many ETFs track benchmark indexes, enabling you to invest in broad markets like the S&P 500 or international stocks. Many investors use iShares funds for long-term core positions while others access specific slices of the market. And many choose ETFs for both. With over 300 ETFs available in the US, iShares offers more choice than any other provider. Read more >

Although ETFs are a great way to invest in broad markets, they're also particularly well suited for precise exposures to specific countries, regions, sectors, and asset classes. Many investors use iShares funds for long-term core positions while others access specific slices of the market. And many choose ETFs for both. With over 300 ETFs available in the US, iShares offers more choice than any other provider. Read more >

Many investors use iShares funds for long-term core positions while others access specific slices of the market. And many choose ETFs for both. With over 300 ETFs available in the US, iShares offers more choice than any other provider.

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GOOD TO KNOW

iShares Funds cost 1/3 as much as the typical mutual fund and about half the tax cost of the average mutual fund. The money you save in management fees and capital gains taxes mean you get to keep more of what you earn. (Source: Morningstar, as of 6/30/14. Comparison is between the average Prospectus Net Expense Ratio for the oldest share class of iShares ETFs (0.37%) and active Open-End Mutual Funds (1.12%) that are available in the U.S. and have 10 year track records (excluding municipal bond and money market funds). “Tax cost” is a Morningstar measure of the impact of taxes on capital gains and income distributions on performance. The average tax cost of the iShares ETFs and active Open-End Mutual Funds included in the comparison = 0.53% and 1.05%, respectively.) Source

Are you looking for a steady stream of income from your investments?

Yes, receiving dividends is important to me.

No, I usually reinvest
for growth.

Some ETFs are specifically designed to pay dividends for investors seeking income. iShares offers many funds for income-seeking investors – including dividend, fixed income, high yield, and preferred stock ETFs. Since an ETF is simply a collection of individual stocks and/or bonds, its behavior reflects that of its holdings, including dividend or coupon payments. Read more >

For investors interested in growth, ETFs offer opportunities to specifically target companies that are expected to grow at an above-average rate, relative to the market. iShares offers many funds for income-seeking investors – including dividend, fixed income, high yield, and preferred stock ETFs. Since an ETF is simply a collection of individual stocks and/or bonds, its behavior reflects that of its holdings, including dividend or coupon payments. Read more >

iShares offers many funds for income-seeking investors – including dividend, fixed income, high yield, and preferred stock ETFs. Since an ETF is simply a collection of individual stocks and/or bonds, its behavior reflects that of its holdings, including dividend or coupon payments.

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GOOD TO KNOW

Dividends provide income and have often performed well in challenging environments, such as down markets and periods of rising interest rates.

Do you like to play the market?

I like to buy and hold.

I like to time my trades.

Important for long-term investing strategies, ETFs often have lower costs and tax benefits when compared to the typical mutual fund. ETFs offer the same trading flexibility as stocks, and can be bought and sold during market hours using limit, market, or stop-loss orders. While many ETF investors take advantage of these features, many others simply use ETFs as a cost-efficient way to build diverse, long-term portfolios. So remember, just because you can trade an ETF like a stock doesn’t mean you have to. Read more >

As with stocks, you can buy and sell ETFs throughout the day, and add precision to your trades by specifying order instructions such as "limit" or "day." ETFs offer the same trading flexibility as stocks, and can be bought and sold during market hours using limit, market, or stop-loss orders. While many ETF investors take advantage of these features, many others simply use ETFs as a cost-efficient way to build diverse, long-term portfolios. So remember, just because you can trade an ETF like a stock doesn’t mean you have to. Read more >

ETFs offer the same trading flexibility as stocks, and can be bought and sold during market hours using limit, market, or stop-loss orders. While many ETF investors take advantage of these features, many others simply use ETFs as a cost-efficient way to build diverse, long-term portfolios. So remember, just because you can trade an ETF like a stock doesn’t mean you have to.

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GOOD TO KNOW

Investors are using ETFs for a buy & hold strategy. 64% of ETF holders keep them for more than 3 years. (Source: This BlackRock research was conducted over the Internet by research firm Market Strategies International. 531 investors, all of whom currently use ETFs and have at least $100K in investable assets, and 260 financial advisors from wirehouse, independent, and RIA channels with at least $50M in assets under management were polled between May 23 and May 31, 2014.) Source

Are ETFs right for you?

Many investors are turning to ETFs for diversified, low-cost, and tax-efficient investing. Whatever your investment goals, iShares funds can help you keep more of what you earn.

Good to know:

  • While ETFs are known for their flexibility to move in and out of short-term investments, most investors use them for long-term, core positions.
  • ETFs can be used to invest in traditional markets like the S&P 500, as well as precise exposures to specific countries, regions, sectors, and asset classes. There are ETFs available for both the income-oriented and the growth-oriented investor.
  • While frequent traders may benefit from the limit and stop-loss capability of ETFs, the lower cost and tax advantages of ETFs can be particularly valuable for the buy-and-hold investor.

Next steps:

Speak to your planner about adding iShares Funds to your portfolio to help you reduce costs and potentially boost portfolio returns.

Contact Us

How To Choose An ETF

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For more information on the differences between ETFs and mutual funds, click here.

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 ETF and BlackRock Fund prospectus pages. Read the prospectus carefully before investing.

Investing involves risk, including possible loss of principal.

Transactions in shares of ETFs will result in brokerage commissions and will generate tax consequences. All regulated investment companies are obliged to distribute portfolio gains to shareholders.

Diversification and asset allocation may not protect against market risk or loss of principal.

There is no guarantee that dividends will be paid.

Shares of the iShares Funds may be sold throughout the day on the exchange through any brokerage account. However, shares may only 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.

The Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).

The iShares Funds are not sponsored, endorsed, issued, sold or promoted by Barclays, Bloomberg Finance L.P., Cohen & Steers Capital Management, Inc., European Public Real Estate Association (“EPRA® ”), FTSE International Limited (“FTSE”), India Index Services & Products Limited, Interactive Data, JPMorgan Chase & Co., Japan Exchange Group, MSCI Inc., Markit Indices Limited, Morningstar, Inc., The NASDAQ OMX Group, Inc., National Association of Real Estate Investment Trusts (“NAREIT”), New York Stock Exchange, Inc., Russell or S&P Dow Jones Indices LLC. None of these companies make any representation regarding the advisability of investing in the Funds. BlackRock is not affiliated with the companies listed above.


Neither FTSE nor NAREIT makes any warranty regarding the FTSE NAREIT Equity REITS Index, FTSE NAREIT All Residential Capped Index or FTSE NAREIT All Mortgage Capped Index; all rights vest in NAREIT. Neither FTSE nor NAREIT makes any warranty regarding the FTSE EPRA/NAREIT Developed Real Estate ex-U.S. Index, FTSE EPRA/NAREIT Developed Europe Index or FTSE EPRA/NAREIT Global REIT Index; all rights vest in FTSE, NAREIT and EPRA.“FTSE®” is a trademark of London Stock Exchange Group companies and is used by FTSE under license.

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