Sydney – BlackRock’s exchange traded fund (ETF) business, iShares, has received positive ratings from research house Lonsec for its four new Australian ETFs. The new funds have amassed a total of A$137 million in assets since listing on the Australian Securities Exchange (ASX) in December 2010.
iShares MSCI Australia 200 (IOZ), iShares S&P/ASX 20 (ILC) and iShares S&P/ASX High Dividend (IHD) all received ‘Recommended’ ratings – the second highest rating from Lonsec and indicating that the research house “has conviction that the fund or product can achieve its objectives.”
Lonsec gave a rating of ‘Investment Grade’ (Lonsec’s third highest rating) to a iShares S&P/ASX Small Ordinaries (ISO) signifying “that Lonsec believes the fund can achieve its objectives”. The report also states that the small cap ETF “represents an efficient, liquid and cost-effective means for investors to gain index exposure to a portfolio of small cap Australian equities.”
Commenting, Mark Oliver, Head of iShares, Australia said:
“We are delighted with the positive ratings by one of Australia’s leading research houses. We have witnessed strong demand for our new products as investors seek greater choice and lower fees for exposure to the Australian sharemarket. We expect demand to continue to increase as investors’ awareness and positive ratings affirm the benefits of the funds.”
“As the global leader in ETFs, we are committed to remain at the forefront of Australia’s rapidly developing ETF market with the launch of new, high quality products, such as fixed income, and a continued focus on investor education and client service,” Oliver concluded.
Lonsec report findings:
“ILC and IOZ provide diversified exposure to leading ASX-listed vehicles. Given the flexibility offered by the ETF structure, there is scope for investors to use the funds as core Australian Equity holdings or in conjunction with quality active strategies to manage portfolio volatility and reduce the cost of maintaining an exposure to the asset class.”
“IHD provides exposure to high dividend paying ASX-listed securities with the potential for franked income. Given the lower turnover nature of the fund it may be most suited to investors seeking a tax effective income stream from their investments.”
“ISO provides exposure to the small caps equities listed on the ASX. Small cap funds invest in a market that is less liquid and more volatile than the large cap Australian equity market.” The report also states, “Given the flexibility offered by the ETF structure, there is scope for investors to use the fund as a core small cap Australian equity holding or in conjunction with quality active strategies to manage portfolio volatility and reduce the cost of maintaining an exposure to the asset class.
“Lonsec notes that the BlackRock investment process has well defined procedures in place for replicating the performance of underlying indices. The structure is robust and clearly documented, thereby limiting the scope for the performance of the funds to differ significantly from the underlying indices.
“As a pioneer and leading global manager in the global ETF market, BlackRock has significant scale, experience and resources for effectively managing and structuring ETFs both in Australia and abroad.”
Lonsec recognises that all iShares funds “offer investors liquidity via the ASX. Authorised participants act as dedicated market makers and seek to provide continuous liquidity to the market. BlackRock distributes a net asset value and the underlying basket of securities each day, allowing the market markers to price the relevant Fund’s securities.”
Further information is available at www.iShares.com.au
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