Published April 18, 2013
BlackRock's (BLK) iShares unit, the world's largest ETF issuer, added to its lineup of factor-driven ETFs today with the debut of five new funds. Two of the new ETFs are managed using BlackRock research rather than tracking an index while the other three are iShares MSCI Factor ETFs, which seek to track MSCI Risk Premia Indices.
The new iShares factor ETFs, both of which are actively managed are the iShares Enhanced U.S. Large-Cap ETF (NYSE: IELG) and the iShares Enhanced US Small-Cap ETF (NYSE: IESM).
"The new funds utilize the pioneering research on factor investing and expertise in risk management of BlackRock rather than tracking an index or individual stock picking. The iShares Enhanced ETFs seek to provide competitive risk-adjusted returns compared to the broad large-cap or small-cap market," said iShares in a statement.
The iShares Enhanced U.S. Large-Cap ETF, which has an annual expense ratio of 0.18 percent, paltry by the standards of many actively managed ETFs, is home to 110 stocks. The fund's top-10 holdings account for just 20.7 percent of the fund's weight. IELG's top holdings include Gamestop (GME), Pfizer (PFE), Johnson & Johnson (JNJ) and Amazon.com (AMZN).
The iShares Enhanced U.S. Small-Cap ETF is home to 263 stocks and charges an annual fee of 0.35 percent. That new ETF's top-10 holdings represent just over 20 percent of the fund's total weight. Top holdings include World Acceptance (WRLD), Buffalo Wild Wings (BWLD) and Arbitron (ARB).
In addition to IELG and IESM, iShares also introduced three other factor-driven ETFs today.
"The iShares MSCI Factor ETFs were designed at the request of institutional investors, such as Arizona State Retirement System (ASRS), who want exposure to a specific individual factor -- value, size or momentum so they can overweight or hedge a single factor that has historically explained a significant part of companies' return and risk over the long-term," said iShares in the statement.
That group includes the iShares MSCI USA Momentum Factor ETF (NYSE: MTUM). With an expense ratio of 0.15 percent, MTUM tracks the MSCI USA Momentum Index. Home to 125 stocks, the new ETF's top-10 holdings include Pfizer, Johnson & Johnson, Wal-Mart (WMT) and Apple (AAPL). MTUM's top-10 stocks represent about 42.5 percent of the fund's overall weight.
Investors looking to mitigate risk can consider the new iShares MSCI USA Size Factor ETF (NYSE: SIZE), which tracks the MSCI USA Risk Weighted Index. SIZE is a massive ETF with 602 holdings, none of which receives an allocation of more than 0.73 percent. The new ETF is also reasonably priced at 0.15 percent per year in fees. Nine of SIZE's top-10 holdings are either consumer staples or utilities stocks with Johnson & Johnson the outlier. Other top holdings include Kimberly Clark (KMB) and General Mills (GIS).
The iShares MSCI USA Value Factor ETF (NYSE: VLUE) rounds out the line-up of new iShares ETFs that launched Thursday. VLUE offers exposure to U.S. large and mid-cap stocks with a focus on companies with lower valuations based on fundamentals, according to the fund's web site.
VLUE also holds 602 stocks and charges 0.15 percent per year. Nine of the new ETF's top-10 holdings are Dow components with Wells Fargo (WFC) being the outlier. Other top holdings include Exxon Mobil (XOM), Chevron (CVX) and AT&T (T).
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