iShares minimum volatility Smart Beta ETFs receive “Recommended” ratings

Last chance for super opportunity
February 20, 2017
Two new appointments further BlackRock Australia’s quest to enhance delivery of service to clients
February 23, 2017

In its first review of the funds, research house Lonsec has awarded “Recommended(Index)” ratings to the iShares Edge Smart Beta Minimum Volatility exchange traded funds (ETFs).

The two ETFs are the iShares Edge MSCI Australia Minimum Volatility ETF (ASX: MVOL) and the iShares Edge MSCI World Minimum Volatility ETF (ASX: WVOL). 

MVOL and WVOL seek to deliver market-like returns with less risk, across Australian and global equities.  The ETFs follow indices that screen for low volatility stocks, consider the correlations between stocks and include guardrails to limit sector and country concentrations.  Importantly, the indices have lost less during downturns, when broad markets have suffered but have still captured meaningful gains during market upswings. 

The “Recommended(Index)” rating indicates that Lonsec considers the iShares Edge MSCI Australia Minimum Volatility ETF to “offer a sound and inexpensive exposure to a portfolio of Australian equities designed to exhibit a lower volatility in returns relative to broad based market cap weighted portfolios”. 

Furthermore, Lonsec considers the iShares Edge MSCI World Minimum Volatility ETF to “represent a relatively simple means for investors to gain an exposure to the global, developed equities markets. It would be difficult for investors to replicate the holdings of the fund with similar cost and administrative efficiency.”

Jon Howie, head of iShares Australia, noted that iShares has the most comprehensive range of smart beta ETFs listed on the Australian Securities Exchange (ASX), and commented that “iShares Edge Smart Beta ETFs are designed to provide Australian investors with a low cost way to strengthen portfolios by targeting outcomes such as reducing risk or enhancing returns.”

Mr Howie also said that the rating was timely for investors where “staying invested, regardless of market movements, is an important determinant of successful investing, but volatility can be unnerving”.

iShares ETFs utilise the portfolio and risk management expertise of BlackRock, and Lonsec also said: “BlackRock’s internally developed systems are sophisticated and highly integrated with implementation, compliance and risk management systems. These systems allow for trade aggregation, risk monitoring and efficient execution across BlackRock’s entire tradebook. Lonsec considers technology to be an important factor in establishing scale and minimising transaction costs needed for a successful passive index and /or ETF business.

“Lonsec believes the overall quality of BlackRock’s investment personnel and research effort to be very high.”

-oOo- 

*The Lonsec Rating (MVOL assigned  October 2016  and WVOL assigned October 2016) presented in this document is published by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445. The Rating is limited to “General Advice” (as defined in the Corporations Act 2001 (Cth)) and based solely on consideration of the investment merits of the financial product(s). Past performance information is for illustrative purposes only and is not indicative of future performance. It is not a recommendation to purchase, sell or hold BlackRock product(s), and you should seek independent financial advice before investing in this product(s). The Rating is subject to change without notice and Lonsec assumes no obligation to update the relevant document(s) following publication. Lonsec receives a fee from the Fund Manager for researching the product(s) using comprehensive and objective criteria.

For further information regarding Lonsec’s Ratings methodology, please refer to the website at: http://www.beyond.lonsec.com.au/intelligence/lonsec-ratings

This material has been produced by BlackRock Investment Management (Australia) Limited ABN 13 006 165 975 AFSL 230 523 (BIMAL). This material provides general information only and does not take into account your individual objectives, financial situation, needs or circumstances. Before making any investment decision, you should therefore assess whether the material is appropriate for you and obtain financial advice tailored to you having regard to your individual objectives, financial situation, needs and circumstances. This material is not a securities recommendation or an offer or solicitation with respect to the purchase or sale of any securities in any jurisdiction. 

BIMAL is the Responsible Entity and issuer of units in the iShares ETFs referred to in this material. Any potential investor should consider the latest product disclosure statement, prospectus or other offer document (Offer Documents) before deciding whether to acquire, or continue to hold, an investment in any BlackRock fund. Offer Documents can be obtained by contacting the BIMAL Client Services Centre on 1300 366 100. In some instances Offer Documents are also available on the BIMAL website at www.blackrock.com.au.

An iShares ETF is not sponsored, endorsed, issued, sold or promoted by the provider of the index which a particular iShares ETF seeks to track. No index provider makes any representation regarding the advisability of investing in the iShares ETFs. Further information on the index providers can be found in the BIMAL website terms and conditions at www.blackrock.com.au. 

BIMAL, its officers, employees and agents believe that the information in this material and the sources on which the information is based (which may be sourced from third parties) are correct as at the date of publication. While every care has been taken in the preparation of this material, no warranty of accuracy or reliability is given and no responsibility for this information is accepted by BIMAL, its officers, employees or agents. Except where contrary to law, BIMAL excludes all liability for this information.

Any investment is subject to investment risk, including delays on the payment of withdrawal proceeds and the loss of income or the principal invested. While any forecasts, estimates and opinions in this material are made on a reasonable basis, actual future results and operations may differ materially from the forecasts, estimates and opinions set out in this material. No guarantee as to the repayment of capital or the performance of any product or rate of return referred to in this material is made by BIMAL or any entity in the BlackRock group of companies. 

© 2017 BlackRock, Inc. All Rights reserved. BLACKROCK, BLACKROCK SOLUTIONS, iSHARES, BUILD ON BLACKROCK, SO WHAT DO I DO WITH MY MONEY and the stylised i logo are registered and unregistered trademarks of BlackRock, Inc. or its subsidiaries in the United States and elsewhere. All other trademarks are those of their respective owners.

AUS2016-921