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iShares expands its factor ETF offering


iShares, the Exchange Traded Funds (ETFs) business of BlackRock (NYSE: BLK), is expanding its factor ETF line-up with the launch of two iShares Enhanced International ETFs. 

The iShares Enhanced International Large-Cap ETF (NYSEArca: IEIL) and iShares Enhanced International Small-Cap ETF (NYSEArca: IEIS) seek to provide investors with long-term capital appreciation and are managed using BlackRock research rather than tracking an index.

The new iShares ETFs complement two iShares US Enhanced ETFs that were launched in April 2013. They are similar to the iShares US Enhanced ETFs in that they too were designed in partnership with Registered Investment Advisors (RIAs) who want access to multiple factors — quality, value and size — packaged in an iShares ETF to help them manage equity exposures and risk. The iShares Enhanced ETFs seek to provide competitive risk-adjusted returns compared to the broad large-cap or small-cap market.

Patrick Dunne, Head of iShares Global Markets and Investments, says: "Factor investing has become increasingly popular as investors look for opportunities to potentially outperform the market over the long-term. We've had a positive response from investors on the entire iShares Factor ETF suite, which currently has over USD7.3 billion in assets under management (AUM) at 21 February, 2014.

"The new iShares Enhanced International ETFs combine well-known factors and provide investors with easy access to multi-factor strategies based on BlackRock's insights. They are of interest to investors who prefer a blending of factors in a single ETF to effectively maximise diversification and manage risk."

Factors are a set of investment characteristics which explain the risk and return behaviour of an asset or stock. Every asset has a unique set of factor exposures — such as quality, value, size and momentum – that influence the asset's return. Factor investing is a well-documented, differentiated approach to traditional market-capitalisation investing. iShares currently offers a suite of factor products: four iShares MSCI USA Factor ETFs that focus on single factors, four iShares Minimum Volatility ETFs that concentrate on volatility reduction and, with the launch today, four iShares Enhanced ETFs that provide multi-factor strategies.

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