iShares Registers 3 Active Equity ETFs

By
December 22, 2011
Share:

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.

 

ETF.COM CHANNELS

Trying to figure out alternatives ETFs? Use our alternatives ETFs channel, library and ETF screener!

Want to learn more about smart-beta ETFs? Check out our smart-beta guide, essentials library and ETF screener!

ETF DAILY DATA

Large-cap U.S. equities and U.S. bond funds, particularly Treasury ETFs, captured the bulk of fresh ETF net assets Wednesday, Sept. 2.

'SPY' and 'BIL' paced State Street's issuer-leading inflows Wednesday, Sept. 2, as total U.S.-listed ETF assets rose to $2.010 trillion.

ETF.COM ANALYST BLOGS

By Dave Nadig

With many ETFs currently trading well off fair value, what’s an ETF investor to do? Don’t panic.

By Matt Hougan

Out-of-favor funds can bring attractive returns.

By Matt Hougan

New data from Charles Schwab show that the death of mutual funds is happening faster than we thought.

By Dave Nadig

Grab the popcorn. Precidian just doubled-down on its nontransparent active ETF proposal with the SEC this morning.

ETF INDUSTRY PERSPECTIVE

By John Del Vecchio

An index that goes long financially sound companies and shorts the ones with problematic balance sheets.

By Dan Draper

The nature of retirement is changing. How can investors adapt?

By Invesco PowerShares

A more in-depth look at the smart-beta survey's results.