Blackrock iShares

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Flag of the United States.svg.png This article contains details specific to United States (US) investors. Acting on fund or ETF suggestions in it may have harmful US tax consequences for non-US investors.

Blackrock iShares is the largest manager of exchange traded funds in both the United States and across the globe. Blackrock iShares are available in the United States and Canada; the United Kingdom; continental Europe; Mexico and Latin America; and in Asia and Australia. At year end 2016, Blackrock iShares was managing $983.453 billion in U.S. assets. [1]

In the United States, Blackrock iShares track indexes provided by Barclays Capital; Cohen & Steers; Dow Jones; FTSE; FTSE Xinhua; iBoxx; JP Morgan; Morningstar; MSCI; NASDAQ: the NYSE; Russell; and Standard & Poors.

History

A timeline of the history of what is now Blackrock iShares:

  • 1996: Barclays Global Investors (BGI) created when Barclays bought Wells Fargo Nikko Advisors (a joint venture between San Francisco-based Wells Fargo & Co. and Tokyo-based Nikko Cordial Securities Inc.) and merged it with its BZW Investment Management unit. [2] The year saw the introduction of World Equity Benchmark (WEBs) exchange traded funds. WEBs were single country stock funds based on MSCI single country indexes. [3]
  • 2000: Launch of iShares ETFs in the United States, United Kingdom, and Canada. [3]
  • 2001: Launch of iShares ETFs in Hong Kong and Japan. [3]
  • 2002: iShares fixed income ETFs launched in the United States. [3]
  • 2006: Barclays buys the German exchange-traded funds provider Indexchange from HypoVereinsbank for 240 million euros. The purchase enables iShares to expand its presence in the European markets. [4]
  • 2007: Launch of iShares in Mexico; launch of high yield bond and municipal bond ETFs in the United States. [3]
  • 2008: First all ETF 529 savings plan created for fee-only advisors. [3]
  • 2009: BGI sells iShares to Blackrock for $13.5 billion; [5] launched ETF (401k) for financial advisors. [3]
  • 2013: Blackrock iShares purchases Credit Suisse's ETFs. [6]

The annual growth of iShares assets under management (AUM) is documented in the following table.

Annual Growth of iShares
Assets Under Management (AUM)[7]
Year AUM (millions)
2009 535,201
2010 571,251
2011 593,356
2012 752,706
2013 914,372
2014 1,024,228
2015 1,092,561
2016 1,287,879
2017 1,752,239

(View Google Spreadsheet in browser, then File --> Download as to download the file.)

Note: If the spreadsheet is blank, select a different sheet, then back to that sheet. The image will be refreshed.


Boglehead portfolios using iShares

The extensive line-up of iShares ETFs allows investors to implement a wide variety of low cost indexed portfolios. In October 2012, iShares introduced a package of ten low expense ETFs (six existing funds plus four new issues) designed and marketed for investors to implement strategic asset allocations [8]

The Core funds include the following ETFs:

iShares Core Funds
Isharescoreetfs.png
iShares Core Funds
ETF Ticker Expense Ratio Inception Fund link Morningstar link
iShares Core S&P Total U.S. Stock Market ETF ITOT 0.03% 1/20/2004 Overview - iShares ITOT
iShares Core S&P 500 ETF IVV 0.05% 5/15/2000 Overview - iShares IVV
iShares Core S&P Mid-Cap ETF IJF 0.07% 5/22/2000 Overview - iShares IJF
iShares Core S&P Small-Cap ETF IJR 0.07% 5/22/2000 Overview - iShares IJF
iShares Core MSCI Total International Stock ETF IXUS 0.11% 10/18/2012 Overview - iShares IXUS
iShares Core MSCI EAFE ETF IEFA 0.08% 10/18/2012 Overview - iShares IEFA
iShares Core MSCI Emerging Markets ETF IEMG 0.14% 10/18/2012 Overview - iShares IEMG
iShares Core Total U.S. Bond Market ETF AGG 0.05% 9/22/2003 Overview - iShares AGG
iShares Core Short-Term U.S. Bond ETF ISTB 0.06% 10/18/2012 Overview - iShares ISTB
iShares Core Long-Term U.S. Bond ETF ILTB 0.06% 12/8/2009 Overview - iShares ILTB

Examples of how iShares ETFs can be used in structuring portfolios consistent with allocations frequently discussed among Boglehead forum members[note 1] are highlighted below.

Three fund portfolio

Main article: Three fund portfolio

The three fund portfolio is an often recommended portfolio for investors seeking a simple, indexed portfolio employing total market funds covering the US stock market, the US investment grade bond market, and international stock markets. The following table provides a low cost implementation of the three fund portfolio, using iShare Core ETFs. The sample portfolio shows an equal division of assets among the three asset classes, which corresponds to a 67%/33% split between stocks and bonds. The three fund portfolio can be adjusted for any desired stock/bond split.

Three Fund Portfolio
Threefundportfolio (2).png
Bill Schultheis' Coffeehouse portfolio [9]
% Allocation ETF fund Ticker Expense ratio
33% iShares Core Total US Bond Market ETF AGG 0.05%
34% iShares Core S&P Total Market ETF ITOT 0.03%
33% iShares Core MSCI Total International ETF IXUS 0.11%

Core Four portfolio

As proposed by Rick Ferri on the Bogleheads® forum, the Core Four are four funds which form the "cornerstone" of a portfolio.

Rick proposes that investors first determine their bond allocation. With the remaining funds, allocate 60% to US stock, 30% to international and 10% to REIT.

Rick stresses that the exact numbers aren't important. For the 60/40 portfolio listed below , you could increase iShares US Real Estate ETF to 10%, drop iShares Core S&P Total Market ETF to 35% and the iShares Core MSCI Total International ETF to 15% if you like round numbers.

The core-four is just a low cost foundation for your portfolio. You could add a slice of value stocks (US and/or International). You could split the bond portion between Treasury Inflation Protected Securities and nominal bonds, which would result in a slightly more conservative version of David Swensen's model portfolio (less international stock and less REIT, but otherwise the same four base funds plus TIPS.

Core four portfolio
Corefour2.png
Rick Ferri Core Four
% Allocation ETF fund Ticker Expense ratio
40% iShares Core Total US Bond Market ETF AGG 0.05%
36% iShares Core S&P Total Market ETF ITOT 0.03%
18% iShares Core MSCI Total International ETF IXUS 0.11%
6% iShares US Real Estate ETF IYR 0.44%

Coffeehouse portfolio

See also: Value Tilting - Stock

This simple 7-fund portfolio was made popular by Bill Shultheis' book The Coffeehouse Investor. He advocates 40% in an intermediate term bond fund and 10% each in various stock funds, resulting in a 60%/40% equity/bond split. This allocation can be adjusted according to risk tolerance. The Coffeehouse Portfolio contains only 10% international stocks (17% of total equities). It slices up the domestic portion, but uses a total international fund. Further information can be found at The Coffeehouse Investor.

Coffeehouse portfolio
Coffeehouse2.png
Coffeehouse portfolio
% Allocation ETF fund Ticker Expense ratio
40% iShares Core Total US Bond Market ETF AGG 0.05%
10% iShares Core MSCI Total International ETF IXUS 0.11%
10% iShares Core S&P 500 ETF IVV 0.05%
10% iShares S&P 500 Value ETF IVE 0.18%
10% iShares Core S&P 600 ETF IJR 0.16%
10% iShares S&P 600 Value ETF IJS 0.25%
10% iShares US Real Estate ETF IYR 0.44%

David Swenson's lazy portfolio

David Swensen is CIO of Yale University and author of Unconventional Success. His lazy portfolio uses low-cost, tax-efficient index funds, a healthy dose of real estate, and inflation-protected securities (TIPS). The overall equity/bond allocation can be adjusted (higher or lower) according to risk tolerance and investor needs.

David Swenson's lazy portfolio
Davidswenson.png
David Swenson's lazy portfolio
% Allocation ETF fund Ticker Expense ratio
30% iShares Core S&P Total Market ETF ITOT 0.03%
15% iShares Core MSCI EAFE ETF IEFA 0.08%
5% iShares Core MSCI Emerging Markets ETF IEMG 0.14%
20% iShares US Real Estate ETF IYR 0.44%
15% iShares 20+ yrs. Treasury Bond ETF TLT 0.15%
15% iShares TIPS Bond ETF TIP 0.20%

Permanent Portfolio

The Permanent Portfolio is a buy-and-hold portfolio that contains a healthy allocation to gold. The portfolio is designed to hold an equal allocation of domestic stocks, gold, short-term treasury bonds, and long term treasury bonds. The portfolio can be implemented with the iShare ETFs listed in the following table.

Permanent Portfolio
Permanentportfolio.png
Permanent Portfolio
% Allocation ETF fund Ticker Expense ratio
25% iShares Core S&P Total Market ETF ITOT 0.03%
25% iShares Gold Trust ETF IAU 0.25%
25% iShares 1-3 yr. Treasury Bond ETF SHY 0.15%
25% iShares 20+ yr.Treasury Bond ETF TLT 0.15%

See also

Notes

  1. ↑ Some forum discussions centering on the sample portfolios denoted on this page are included below:

References

  1. ↑ ETF League Table, indexuniverse.com. December 30, 2016.
  2. ↑ Barclays to Acquire a Unit Of Wells Fargo and Nikko, New York Times news release, June 22, 2009.
  3. ↑ 3.0 3.1 3.2 3.3 3.4 3.5 3.6 About iShares
  4. ↑ Barclays buys HVB's Indexchange unit for 240 million euros, news release, dans le monde, November 7, 2006
  5. ↑ BlackRock snares BGI in blockbuster $13.5 billion deal, June 12, 2009, Market Watch
  6. ↑ BlackRock's iShares to buy Credit Suisse's ETF unit, news release, January 10, 2013.
  7. ↑ Annual Reports & Proxy Statements | BlackRock, viewed November 23, 2017.
  8. ↑ iShares Cuts Fees On 6 Funds, Unveils 'Core', indexuniverse.com, news release, October 15, 2012.
  9. ↑ Kirk Report: Bill Schultheis' Coffeehouse Portfolios (2/13/2007), archived. Link now requires paid membership.

External links

Bibliography

Mutual funds
Exchange-traded funds
Brokerages
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