iShares ‘Core’ ETFs Look Good A Year In

October 15, 2013

A one-year checkup of the iShares 'Core' brand reveals a robust lineup of ultra-cheap ETFs.

A year ago today, iShares launched its "Core" series of low-cost ETFs, which involved the launch of four new funds and the repackaging of six existing funds—all in low- or lower-cost wrappers, in an effort to revitalize the firm's ETF lineup amid an increasingly competitive landscape.

Looking back at the past 12 months, and at the glossy television and print media advertising campaign that accompanied the rollout, it seems fair to say that investors have embraced the "Core" concept, and that BlackRock did manage to revitalize the iShares brand.

As IndexUniverse Director of Research Dave Nadig put it back when the "Core" funds debuted a year ago, the move made sense for a company that had been "a bit out of the game" among ETF-focused advisors who have become increasingly aware of costs, and who had been turning more and more to competitively priced offerings from firms like Vanguard and Schwab.

The "Core" lineup is a comprehensive low-cost offering that allows investors to own core equities and fixed-income asset classes. In sum, the rollout seems to have fueled a new wave of iShares asset gathering. Eight of the 10 "Core" ETFs raked in more than $18.15 billion in combined new assets in the past year. That's nearly 3 percent of iShares' total U.S.-listed ETF assets in its more than 250 ETFs.

Together the 10 "Core" ETFs have total assets of almost $100 billion, or nearly 16 percent of iShares' total assets under management of $628 billion, according to data compiled by IndexUniverse.

Flows And Performance

In a broad sense, U.S. equities and international equities "Core" ETFs did well from both an asset-gathering as well as a performance standpoint in the past year, as investors expressed their growing confidence in an improving U.S. economy and upped their risk appetite outside U.S. borders as well.

When it comes to "Core," a trio of U.S. stock ETFs really stood out since the lineup came to market a year ago. At 0.07 percent a year in fees—or $7 per $10,000 invested—the now-$45.84 billion iShares Core S&P 500 ETF (IVV | A-99) was the most popular "Core" ETF, with net creations of $6.0 billion in the past 12 months. The fund was also a star in terms of performance, delivering gains of 18.4 percent in the period.

Similarly, the $20.34 billion iShares Core S&P Mid-Cap ETF (IJH | A-82) and the $12.52 billion iShares Core S&P Small-Cap (IJR | A-89) also raked in sizable assets, to the tune of $5.5 billion and $1.84 billion, respectively, in the same period.

IJR was also the best-performing "Core" ETF, rallying 33 percent in the 12-month period since the lineup was unveiled, followed by IJH's 28 percent gain in the same period. The funds have annual expense ratios of 0.17 percent and 0.15 percent, respectively.

All three of these ETFs already existed before "Core" was introduced, but were repackaged in lower-cost wrappers last October to make them more competitive.

Here's a quick glance at how the "Core" ETFs have done in the past year:


Fund Ticker 1-Year Net Flows AUM 1-Year Returns
U.S. Stocks
iShares Core S&P 500 IVV $6.00B $45.84B 18.40%
iShares Core S&P Mid-Cap IJH $5.51B $20.34B 28%
iShares Core S&P Small-Cap IJR $1.84B $12.52B 33%
iShares Core S&P Total U.S. Stock Market ITOT $388M $866M 19.50%
International Stocks
iShares Core MSCI EAFE IEFA $829M $994M 22.50%
iShares Core MSCI Emerging Markets IEMG $2.40B $2.49B 5.70%
iShares Core MSCI Total International Stock IXUS $83M $160M 15.50%
U.S. Bonds
iShares Core Short-Term U.S. Bond ISTB $35M $59M 0.08%
iShares Core Long-Term U.S. Bond ILTB -$149M $36M -14.3%
iShares Core Total U.S. Bond Market AGG -$615M $14.4B -4.7%



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