iShares Emerging Markets Equity Index: May 2020 fund update

Kate Marshall | Mon 11 May 2020

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  • BlackRock, a pioneer in index investing, has a great record of managing tracker funds
  • We view this fund as a good option to get access to a broad spread of companies in emerging markets
  • It's one of the lowest-cost options for investing in these markets – this could help the fund track the index closely

How it fits in a portfolio

This fund invests in a broad spread of companies based across emerging countries, including China, India, Brazil, South Africa and Taiwan. We think it's a convenient way to invest in the emerging markets, and could be used as a way to diversify a long-term, global investment portfolio. These markets are higher risk as they're at an earlier stage of development, so this fund should only be considered for a portfolio with a longer investment outlook that can accept periods of volatility.

Manager

Kieran Doyle is a Senior Portfolio Manager in BlackRock's Institutional Index Equity Team. He's been part of the team since 2004 and currently named as this fund's manager, though the entire team helps to run the fund. The wider team, which is made up of over 50 people, is well-resourced and experienced in index investing. BlackRock has a long history of running index tracker funds, and set up the industry's first tracker fund in 1971.

Process

This fund aims to track the performance of the broader emerging stock market, as measured by the FTSE All-World Emerging Index. It's currently made up of around 1,300 companies, and is focused towards sectors such as financials, technology and consumer-related businesses.

This fund invests in almost every company in the FTSE All-World Emerging Index. This is known as partial replication, which could help the fund track the index closely without the cost of holding every stock in it. Companies that make up a very small part of the index are sometimes not held in the fund as they can be more difficult or expensive to buy and sell. The fund can also lend some of its investments to others in exchange for a fee. This helps to keep costs lower.

Culture

The iShares brand represents BlackRock's family of index tracking and exchange-traded funds. The group is a pioneer in index investing. After launching the first tracker fund in 1971, the company has continued to innovate and now offers a large number of index tracking strategies covering a wide range of geographies, sectors, and markets.

As one of the world's largest asset managers, and with lots of resource and knowledge under its belt, it aims to continue to drive further development in this part of the investment market. Being such a large player in the index tracking arena gives BlackRock unique access to the marketplace, which can help reduce trading costs.

Cost

The fund is available for an annual ongoing charge of 0.16%. We think this is excellent value for an emerging markets tracker option run by a provider we rate highly. Our platform charge of up to 0.45% per year also applies.

Performance

The fund has tracked the FTSE All-World Emerging Index well since launch in 2009. It's tracked the index very closely over shorter periods, though over the long run it’s fallen behind the benchmark due to the costs involved. This is to be expected from an index tracker fund.

Given BlackRock's size, experience and expertise running index tracker funds, we expect the fund to continue to track the index well in future, though there are no guarantees how it will perform.

A glance at the five-year performance table below shows in some years the fund has tracked the index closer than others. On occasion it has even ended up slightly ahead of the index due to the strategies used by the team, although this won't necessarily happen in future and isn’t an aim of the fund.

Annual percentage growth
Apr 15 -
Apr 16
Apr 16 -
Apr 17
Apr 17 -
Apr 18
Apr 18 -
Apr 19
Apr 19 -
Apr 20
iShares Emerging Markets Equity Index -13.8% 34.1% 11.8% 2.3% -7.9%
FTSE Emerging -13.4% 34.9% 11.5% 3.2% -8.7%

Past performance is not a guide to the future. Source: Lipper IM to 30/04/2020.

More on iShares Emerging Markets Equity Index, including charges

iShares Emerging Markets Equity Index key Investor Information

Important information

Please remember the value of investments, and any income from them, can fall as well as rise so you could get back less than you invest. This article is provided to help you make your own investment decisions, it is not advice. If you are unsure of the suitability of an investment for your circumstances please seek advice.

No news or research item is a personal recommendation to deal.

Hargreaves Lansdown Asset Management is authorised and regulated by the Financial Conduct Authority.

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