iShares has launched a Factor ETF series as investors seeking exposure to global equity markets express more distinct views on specific drivers of risk and return.
iShares Factor ETFs are an expansion of BlackRock’s Smart Beta platform, targeting sources of return which cannot be isolated through traditional market capitalisation weighted indices.
Each fund provides access to global equity markets and seeks to offer targeted exposure to a specific factor that has historically provided enhanced risk adjusted returns: value, size, quality and momentum. Through these funds investors are able to express factor views throughout the business cycle. They can be used as part of a broad portfolio to diversify portfolio risk or used as niche exposures aiming to boost portfolio performance.
The funds complement iShares’ existing suite of Smart Beta ETFs, which includes a minimum volatility factor range that aims to provide broad, diversified market exposures with reduced volatility. iShares Factor ETFs are based on MSCI indices.
Sara Shores, global head of smart beta for BlackRock, says: “Our Smart Beta strategies are simply the next step in the 40 year evolution of passive investing at BlackRock. Through the iShares Factor ETFs, investors can now access sources of potential additional return in a passively implemented portfolio. Complementing our minimum volatility products, our new Factor funds allow investors to emphasise specific, high conviction investment views or construct a broadly diversified portfolio along factor dimensions with the goal of outperforming the broad equity market.”
Deborah Yang, head of MSCI’s index business in EMEA and India, adds: “We are delighted to license an innovative set of MSCI Factor Indexes to iShares for their new ETF Factor series. Built on a solid research framework and leveraging 40 years of factor expertise, MSCI's family of factor indexes has been widely adopted by investors, with over USD100 billion currently benchmarked to them.”