iShares Registers 3 Active Equity ETFs

December 22, 2011

iShares puts three active “strategic beta” equity ETFs into its product pipeline.

iShares, the world’s largest provider of exchange trade funds, filed paperwork with the Securities and Exchange Commission to market three actively managed equity ETFs focused on broad market sectors.

iShares didn’t release tickers or expense ratios in its filings. The names of the three funds and the links to their filings are as follows:

iShares Strategic Beta U.S. Small Cap Fund

iShares Strategic Beta Developed International Small Cap Fund

iShares Strategic Beta U.S. Large Cap Fund

The three proposed iShares funds speak to a growing interest on the part of ETF sponsors to market funds with higher returns in the current uncertain environment. That’s true of indexed ETF strategies using “smart beta” screens, just as the three proposed "strategic beta" iShares ETFs will use actual managers to select funds deemed to have superior potential for returns.

All the three new iShares funds take definable categories of stocks and then whittle them down by means of rules-based screens to emphasize stocks with higher quality earnings, lower relative valuations, and smaller market capitalizations, while eschewing those that lack those qualities.

Within their respective categories, the funds all target the same broad base of sectors that include discretionary consumer spending, financial and industrial companies.

Being actively managed, these funds typically will have a higher portfolio turnover than funds that seek to replicate the performance of an index, the filing said.

Under normal circumstances the funds will invest at least 80 percent of their net assets in equity securities comprising their respective investment categories: U.S. large cap, U.S. small cap, and international small cap.

The filing said that the funds will invest in currency forwards for hedging or trade-settlement purposes.

iShares said it reserves the right to lend up to one-third of the assets of each one of these funds, and the company noted, securities lending involves the risk that the funds may lose money because the borrower may fail to return the securities in a timely manner or at all.

In addition, according to the filings, were this type of event to occur, it could trigger negative tax consequences.



Lean why bond ETFs are an essential part of a diversified portfolio with our bond ETF channel.

Learn how currency-hedged ETFs can reduce the currency risk in your portfolio.


Investors took profits on U.S. equity ETFs on Friday, Nov. 20.

Top three issuers saw net inflows in their products on Monday, Nov. 23.


By Dave Nadig

With the SEC looking to regulate liquidity, should bond ETF investors worry?

By Matt Hougan’s conference offered several actionable ideas for investors.

By Dave Nadig

The exchange just proposed the latest rule to reinvent history on bad ETF trades.

By Matt Hougan

Best deal in the history of finance gets better.


By Nicholas Kalivas

The case for low-volatility, currency-hedged exposure in Europe.

By Nick Stonestreet

ETF firm builds out its business.

By Nicholas Kalivas

A sector-momentum strategy may be just what your portfolio needs in the current market environment.