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ESSENTIALS OF ETFS
Agenda
Benefits of ETFs
Portfolio Strategies
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Best of both worlds
Like an index fund…
Constructed to reflect performance of a benchmark
Low management costs
Low turnover
Like a share….
Trading flexibility intra-day on the exchange
Long or short
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Introducing ETFs
Exchange traded funds (ETFs) are index funds, which
are listed and traded on major stock exchanges around the
world.
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Unique benefits of ETFs
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Precise market access
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Diversification
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Transparency
Manage costs
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Comparing Management Costs
Market Category Universe of funds iShares fund
Japanese Market Equities Of the 15 Japanese Market Equity Funds, iShares MSCI Japan
the average fee in Australia is 1.78% – management cost is
(ranging from 1.00% to 2.40%) 0.52%
Emerging Market Equities Of the 54 Emerging Market Equity iShares MSCI Emerging
Funds, the average fee in Australia is Markets – management
1.92% (ranging from 0.56% to 3.20%) cost is 0.72%
US Market Equities Of the 12 US Equity Funds, the average iShares S&P 500
fee in Australia is 1.92% (ranging from – management cost is
0.65% to 2.64%) 0.09%
Global Large Cap Equities Of the 1,140 Global Market Equity Funds, iShares S&P Global 100
the average fee in Australia is 1.89% – management cost is
(ranging from 0.19% to 4.79%) 0.40%
Management Costs for the iShares funds represent total fund management fees and expenses as a percentage of average net assets,
and is equivalent in calculation to the indirect cost ratio (‘ICR’) and the management cost ratio (‘MER’).
Analysis and table were prepared by BlackRock Asset Management Australia Limited using information provided by
Morningstar Research Pty Limited (“Morningstar”). The information is as at 2 November 2009.
Morningstar takes no responsibility for the analysis, the accuracy of the information or the way in which the information provided
by them has been presented.
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Trading could not be simpler
Equity-like execution:
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Investment strategies using iShares
Category Objective Strategy
Tactical rotation
Can easily be applied among countries, styles and market cap
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Building a portfolio core/satellite strategy
Core plus satellites
Expected total return %
Core portfolio
Total risk %
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IMPORTANT INFORMATION
Before investing in an iShares fund, you should carefully consider the appropriateness of such products to your circumstances, read the Australian
prospectus and consult an investment adviser. This information is general in nature and has been prepared without taking into account your objectives,
financial situation or needs.
This information has been prepared by BlackRock Asset Management Australia Limited ABN 33 001 804 566, AFSL 225 398. BlackRock Asset Management Australia
Limited is the local agent and intermediary for iShares (iShares, Inc. ARBN 125 632 279 formed in Maryland, USA; iShares Trust ARBN 125 632 411 organised in
Delaware, USA. The liability of shareholders is limited.). The information in this document relates to iShares funds quoted on the Australian Securities Exchange (“ASX”).
Trades on ASX in the shares of an iShares fund are settled using CHESS Depositary Interests (or “CDIs").
BlackRock Fund Advisors serves as an advisor to the iShares funds that are registered with the United States Securities and Exchange Commission under the Investment
Company Act of 1940. BlackRock Asset Management Australia Limited and BlackRock Fund Advisors are wholly-owned subsidiaries of BlackRock, Inc.
International investments such as an iShares fund may have different risk characteristics compared to investments in other securities listed on the ASX that do not have
international exposure.
Past performance is not a reliable indicator of future performance.
Shares of an iShares fund trade on an exchange at market price (not, net asset value ("NAV")). Shares may only be redeemed directly from an iShares fund by persons or
entities in the United States called 'Authorised Participants', in very large creation/redemption units.
The iShares funds are not sponsored, endorsed, issued, sold or promoted by MSCI, Inc. or Standard & Poor’s.
Transaction costs are incurred when buying or selling shares of a Fund on the ASX, and brokerage commissions if such trades are done through a broker.
The performance of an iShares fund is not guaranteed.
©2009 BlackRock Asset Management Australia Limited. All rights reserved. iShares® is a registered trademark of BlackRock, Inc.
Each universe consists of retail and wholesale funds. All funds are “open” funds. Management Expense Ratio ("MER") and Indirect Cost Ratio ("ICR") figures have been
incorporated into the above expense ratios. The universe of Japanese Market Equities is represented by the Morningstar Category Equity Japan. The universe of
Emerging Market Equities is represented by the Morningstar Category Equity Emerging Markets. The universe of US Equities is represented by the Morningstar Category
Equity North America. The universe of Global Market Equity funds is represented by those funds benchmarked to the MSCI World Ex-Australia.
©Morningstar Research Pty Ltd ABN 83 062 096 342, AFSL 243161. All rights reserved. To the extent that any of the content above constitutes advice, it is general
advice that has been prepared by Morningstar, without reference to your objectives, financial situation or needs. Before acting on any advice, you should consider the
appropriateness of the advice and we recommend you obtain financial, legal and taxation advice before making any financial investment decision. If applicable, investors
should obtain the relevant product disclosure statement and consider it before making any decision to invest. Please refer to our Financial Services Guide (FSG) for more
information at www.morningstar.com.au/fsg.asp
Management Costs means total fund management fees and expenses as a percentage of average net assets, and is equivalent in calculation to the indirect cost ratio
('ICR') and the management expense ratio ('MER'). For the purposes of this analysis, both expenses and fees calculations are referred to as Management Cost or fee.
Funds where no Management Cost/MER/ICR was provided were excluded from the analysis. The analysis does not take into account entry/exit fees or other transaction
costs.
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