Uses: Equity

The remarkable growth in exchange traded funds (ETFs) has been fuelled by demand from institutional and private investors. In meeting their specific investment needs, asset managers, investment consultants, wealth advisers and private investors alike are making use of iShares funds.

As more investors become aware of the trading flexibility, diversification and low cost benefits of iShares funds, the list of applications for these tools continues to grow.

Rather than being purely "passive" investments, iShares funds are as active as you want them to be.

Objective	Example
Achieve cost-effective exposure to world markets	The simplest way of investing in iShares funds: use iShares to gain highly diversified and cost-effective exposure to the world’s bond and equity markets. European-listed iShares funds have annual management charges of 0.20% for bond funds and as low as 0.15% for equity funds.
Asset allocation strategies	With just several trades, create a portfolio that reflects your desired asset allocation strategy across geographical regions, equities and bonds.
Build core holdings	Use iShares funds to establish broad market exposure in a core-satellite portfolio.
Establish satellite holdings	Use iShares funds to establish higher-risk satellite holdings, such as exposure to Emerging and Far Eastern markets.
Put idle cash to work in the markets	Maintain exposure to the markets while researching or waiting for specific investment opportunities to arise, such as individual stock plays or tactical asset views.
Select international investments	Implement a bullish single country play while maintaining a broad developed or emerging market investment.
Manage risk 1. - security diversification	As index funds, iShares funds give exposure to the performance of all the securities in an index, making them ideal tools for reducing risk arising from concentration in specific stocks or sectors.
Manage risk 2. - geographic and asset class diversification	Diversify across markets, asset classes and regions to reduce the risk that all your investments will decline in value at the same time.
Manage risk 3 - reduce active manager risk	Combine actively managed holdings with holdings in iShares funds to reduce the risk to a portfolio of active managers underperforming their benchmarks.
Implement large vs mid-cap views	Investors can retain flexibility in how they take profits or harvest losses from the large- and mid-cap portions of the equity market.
Rebalancing portfolios	As your investments change, reflecting the fortunes of world markets, it is almost inevitable that your portfolio’s asset allocation will drift away from your original long-term asset allocation plan. iShares funds are efficient tools for bringing portfolios back in line with their asset allocation policies.
Accessing corporate bond markets	It is often difficult for private investors to buy individual corporate bonds. And if corporate bonds are available, it may be difficult to achieve adequate diversification and keeping trading costs in check.
Establish fixed income core holdings	Just like building a core-satellite equity portfolio, use iShares funds to create the core of a bond portfolio, using individual bonds to tilt the portfolio and reflect views on interest rates or specific credit issues.
Manage investment income	For investors who require frequent income from their investments, fixed income iShares funds paying monthly or quarterly dividends may be preferable to individual bonds or traditional bond funds that pay coupons semi-annually.
Enhance bond portfolio yields	Boost yield in a bond portfolio by using fixed income iShares funds to increase exposure to corporate bond markets.

BlackRock does not guarantee the performance of the shares or funds. Investment in corporate bonds brings an increased risk of default on repayment which may affect the capital value of the Fund. Investors should be aware that the use of derivatives and short positions may involve the loss of all the money you invested and you may have to pay more later.

As with other investments, investors should be aware that the price of your investment (which may trade in limited markets) may go down as well as up and you may not get back the amount you invested. In addition your income is not fixed and may fluctuate. Investors are advised to seek the advice of an independent financial advisor in assessing the suitability of iShares as an investment.

The performance quoted on this website represents past performance. Past performance may not necessarily be repeated and is no guide to future returns.