iShares, the largest ETF issuer by total assets, announced the launch of its “Core Series” of ETFs this week. The move involves the launch of a handful of new ETFs, changes to the names and prices of some of the most popular iShares ETFs, and tweaks to the indexes of others. The moves come as part of the launch of a suite of “core” ETFs designed to be building blocks for the original ETF audience: investors building a long-term, buy-and-hold portfolio [for updates on all new ETFs, sign up for the free ETFdb newsletter].
New iShares ETFs: Going International
Four new iShares ETFs began trading on Monday, including three international stock funds and a short term Treasury ETF. The new ETFs are:
|IXUS||Core MSCI Total International Stock ETF||0.16%|
|IEMG||Core MSCI Emerging Markets ETF||0.18%|
|IEFA||Core MSCI EAFE Investable Market ETF||0.14%|
|ISTB||Core Short-Term U.S. Bond ETF||0.12%|
- Core MSCI Total International Stock ETF (IXUS): This ETF will seek to replicate the MSCI ACWI ex USA Investable Market Index, a benchmark that includes both developed and emerging markets from around the globe.
- Core MSCI Emerging Markets ETF (IEMG): This ETF will seek to replicate the MSCI Emerging Markets Investable Market Index, offering another option for those looking to invest in developing economies such as China, India, and Brazil.
- Core MSCI EAFE ETF (IEFA): This ETF will seek to replicate the MSCI EAFE Investable Market Index, offering a way to invest in developed markets outside of North America. The EAFE region includes Western Europe, Australia, and Japan.
Each of the new ETFs offers similar exposure to existing iShares ETFs. For example, EEM and EFA offer exposure to MSCI indexes that cover emerging and ex-U.S. developed markets, respectively. The new Core ETFs, however, feature competitive expense ratios; IEMG will be one of the cheapest ETFs in the Emerging Markets Equities ETFdb Category.
Also added was the iShares Core Short-Term U.S. Bond ETF (ISTB), which will replicate an index consisting of Treasuries and corporate bonds with one to five years remaining to maturity. That fund will charge 0.12% annually.
Name Changes And Price Cuts
Along with the new fund launches came a slew of price cuts and name changes for existing iShares ETFs:
- iShares Core S&P Total U.S. Stock Market ETF (ITOT): Formerly offered under the ISI ticker, this fund linked to the S&P Composite 1500 will have a new expense ratio of 0.07%.
- iShares Core S&P 500 ETF (IVV): The popular S&P 500 ETF now has an expense ratio of 0.07%.
- iShares Core S&P Mid-Cap ETF (IJH): Fees on this ETF dropped to 0.15%.
- iShares Core S&P Small-Cap ETF (IJR, A): This ETF will now cost just 0.16% annually.
- iShares Core Total U.S. Bond Market ETF (AGG, A+): The ultra-popular AGG will now have an expense ratio of 0.08%, making it one of the cheapest ETFs in the Total Bond Market ETFdb Category ( (SCHZ, A-) charges just 0.05%).
iShares also changed the benchmark on its long-term bond ETF, formerly offered under the ticker GLJ, to the Barclays U.S. Long Government / Credit Bond Index. The new ETF will trade under the ticker (ILTB) and have an expense ratio of 12 basis points annually.
Core ETFs: Portfolio Building Blocks
The 10 iShares ETFs are designed as “building blocks” for investors looking to build a low turnover, buy-and-hold portfolio for the long term. The group of funds covers every major domestic and international asset class. “As more and more investors turn to ETFs5 for the diversification and exposures they seek in the core of their portfolios, we saw the opportunity to offer a cost-effective suite of funds that still provide the same professional quality you expect from iShares,” said Mark Wiedman, Managing Director and Global Head of iShares. “We believe that every investor is unique, and with the iShares Core Series, investors have the opportunity to match their large, long-term core holdings to their individual needs and still have the flexibility to complement them with more specialized ETFs that suit their specific objectives.”
Disclosure: No positions at time of writing.