BlackRock’s (NYSE: BLK) iShares unit, the world’s largest issuer of exchange traded funds, bolstered is smart beta lineup with the introduction of the iShares FactorSelect suite, which is comprised of five new exchange traded funds.
“iShares FactorSelect ETFs provide efficient access to a portfolio of stocks that seek to track MSCI benchmarks that combine four well-known investment factors: value, quality, momentum and size. The indices aim to maximize exposure to these four factors, while maintaining a similar level of risk to their respective broad market indexes. Investors can use the funds as a core strategic allocation tool to gain access to factors that have historically provided enhanced risk adjusted returns,” according to a statement issued by iShares.
The iShares FactorSelect MSCI USA ETF (NYSEArca: LRGF) tracks the MSCI USA Diversified Multi-Factor Index. Home to 131 stocks, the iShares FactorSelect MSCI USA ETF allocates almost 42% of its combined weight to the healthcare and financial services sectors. Technology commands a weight of 16%. The new ETF does not allocate more than 2.84% to any of its components and charges 0.35% per year.
LRGF has a small-cap equivalent in the form of the iShares FactorSelect MSCI USA Small-Cap ETF (NYSEArca: SMLF), which is benchmarked to the MSCI USA Small Cap Diversified Multi-Factor Index. With 510 holdings, SMLF features a deeper bench than its large-cap counterpart.
The new smart beta small-cap offering devotes nearly two-thirds of its combined weight to financial services, technology and healthcare names. No stock commands more than 1.39% of the new ETF’s weight. SMLF charges 0.5% per year. [Small-Caps Enjoy Buyback Binge]
The iShares FactorSelect MSCI International ETF (NYSEArca: INTF) is “a portfolio of global developed market large- and mid-cap stocks (ex U.S.) based on an index that focuses on four well-known investment factors: value, quality, momentum, and low size,” according to iShares.
The new ETF, which is home to 324 stocks, is a developed market offering as each of its 16 country weights fit that designation. Over 42% of the fund’s weight goes to Japanese and British stocks with Switzerland being the only other country to command a double-digit weight. INTF charges 0.45% per year. [Increased Appetite for International ETFs]
INTF has a small-cap counterpart in the form of the iShares FactorSelect MSCI Intl Small-Cap ETF (NYSEArca: ISCF). That new ETF follows the MSCI World exUSA SmallCap Diversified Multi-Factor Index. ISCF holds almost 660 stocks and like INTF, its large-cap peer, ISCF is heavy on Japanese and British stocks as those countries combine for almost 52% of the new ETF’s weight. ISCF carries an annual expense ratio of 0.6%. [Embracing International Small-Cap ETFs]
The iShares FactorSelect MSCI Global ETF (NYSEArca: ACWF) benchmarks to the MSCI ACWI Diversified Multi-Factor Index. As a global ETF, the iShares FactorSelect MSCI Global ETF features exposure 19 countries, including developed and emerging markets.
Four of ACWF’s top 12 country weights are emerging markets, but U.S. stocks command nearly 43% of the new ETF’s weight.
iShares FactorSelect MSCI USA ETF Top 10 Holdings
Table Courtesy: iShares