iShares Frequently
Asked Questions
Q: What are iShares ETFs?
A: iShares are the world’s largest family of Exchange
Traded Funds (ETFs). Like shares, they are designed to
be liquid, easy to use and traded on an exchange. Like
index funds, they can offer the benefits ofm
diversification, market tracking and low expenses.
In short, iShares ETFs can provide the exposure you
need, when you need it. In Australia, iShares offers a
range of Australian equity, international equity and
Australian fixed income ETFs via the ASX.
Q: Who is the company behind iShares?
A: iShares ETFs are brought to you by BlackRock, one of
the world’s leading investment managers and itself an
index-investing pioneer over many decades.
At 31 December 2014, BlackRock’s assets under
management (AUM) was US$4.652 trillion. Headquartered
in New York City, the firm has approximately 12,200
employees in 30 countries and a major presence in key
global markets.
Q: What are the benefits of iShares ETFs?
A: iShares ETFs can provide investors with a number of
benefits, including:
``Diversification – With one simple trade on the ASX
iShares ETFs can provide a quick, simple way to
diversify your portfolio.
`` Cost efficiency – iShares ETFs are usually less costly
than many traditional managed funds.
``Flexibility – Like shares, iShares ETFs can be bought
and sold during market hours, in varying quantities.
``Transparency – Portfolio holdings of each iShares ETF
are publicly disclosed as often as daily. You know what
you own.
``Liquidity – iShares ETFs are designed to be traded on
the ASX as easily as any share, allowing you to quickly
respond to changing market conditions.
`` Tax efficiency – Compared to actively managed funds,
ETFs may prove more tax efficient as a result of lower
levels of portfolio turnover.
Q: Are all iShares ETFs index funds?
Q: Can iShares ETFs be bought or sold directly
through BlackRock?
A: No. Investors can only buy and sell shares or units (as
applicable) in an iShares ETF as outlined in the
previous question.
Q: Can I buy iShares ETFs on my margin lending facility?
A: Yes. Most iShares ETFs have an approved loan to value
ratio (LVR) with major margin loan providers. Check with
your margin loan provider for specific details.
Note: There are always additional risks associated with
margin investing. As with stocks, you may be called upon
to deposit additional cash or securities if your account
equity, including that attributable to iShares, declines.
Q: How do I track the value of my iShares investments?
A: iShares ETFs are displayed in share price tables
available in most print and online financial and
mainstream newspapers. Prices are also available daily
on our website at iShares.com.au and at the ASX
website www.asx.com.au.
Q: How is the trading price of an iShares ETF determined?
A: The trading price of an iShares ETF should be
approximately equal to the trading value of the
underlying securities held in the fund plus any
undistributed net income.
Q: Is trading volume the same as liquidity?
A: No. The printed trading volume is not indicative of
iShares funds’ liquidity. The open-end structure makes
iShares funds as liquid as their underlying securities.
This is due to the unique creation and redemption
process inherent in ETFs.
Q: Do iShares distribute dividends?
A: Yes. Dividends (if declared) are distributed to investors
in an iShares fund on the payment dates relevant to
each fund. Declared dividends are generally paid on a
quarterly or semi-annual basis, depending on the
fund. Full details of distribution dates are provided on
the iShares website iShares.com.au.
A: Yes. Each iShares fund is designed to reflect the return
of a particular index. For example, the iShares Core S&P
500 ETF aims to provide investors with the performance
of the market, before fees and expenses, as represented
by the S&P 500 Index.
Q: Is there a dividend reinvestment plan (DRP)?
Q: How do I buy iShares in Australia?
Q: Do franking credits apply to iShares ETFs?
A: iShares ETFs trade on the Australian Securities Exchange
(ASX). They can be traded anytime during ASX trading
hours, using the same strategies associated with shares
(market, limit and stop orders, for example). iShares can
be bought or sold, just like shares and traded via financial
advisers, stockbrokers or online brokers.
A: Franking credits only apply to Australian equity
iShares. In general, available franking credits are
passed on to the end investor.
A: Yes, there is a DRP for Australian equity and Australian
fixed income iShares ETFs. See the iShares ETF
Distribution Reinvestment Plan booklet on our website
for more information.
Q: How do the management costs* of iShares funds
compare against those of traditional active
managed funds?
A: Management costs are generally less than most
traditional actively managed funds. Because iShares
ETFs are publicly traded the buying and selling of
iShares on the ASX will incur transaction costs and
brokerage commissions if such trades are done
through a broker.
Q: Are international iShares ETFs exposed to currency
risk (i.e. are they unhedged)?
A: iShares have both AUD hedged and unhedged
international ETFs listed on the ASX.
Currency hedged iShares ETFs can be identified by
‘AUD Hedged’ in the name. They allow investors to
potentially reduce the volatility of their international
investments or take strategic positions based on
expected currency movements.
All other ASX-listed international iShares ETFs are not
hedged for currency risk. An Australian investor who
invests in these has both exposure to the foreign
exchange rate of currency conversion as well as exposure
to the price level of the relevant underlying securities.
Distributions arising from these iShares ETFs occur in
US$. After calculation by the Registrar in Australia of
US withholding tax amounts these payments are
converted into A$ (usually on record date + fourteen
in Australia) for crediting to the bank accounts of
Australian iShares investors.
Q: How can I make enquiries about my holding in
iShares ETFs?
A: Computershare Investor Services Pty Limited is the
Registrar for iShares in Australia. All enquiries
regarding holdings in iShares ETFs should be directed
to 1300 474 273 or visit www.computershare.com.au
Q: What is a Chess Depositary Interest (CDI)?
A: CDIs are only relevant for unhedged international iShares
ETFs. A CDI is an instrument created by CHESS
Depositary Nominees Pty Limited (CDN), a subsidiary of
ASX. CDN is the depository nominee for unhedged
international iShares ETFs. CDIs enable the trading of
foreign securities on the ASX under its electronic transfer
and settlement system. A holder of a CDI obtains a
beneficial interest in an international iShares ETF.
Q: Where do I go to obtain more information about
iShares products?
A: More information on the iShares product range can be
found on our website iShares.com.au or through your
investment adviser.
* Total management fees and expenses as a percentage of annual average net assets, and is equivalent in calculation to the indirect cost ratio (“ICR”) and
the management expense ratio (“MER”).
Want to know more?
1300 474 273
[email protected]
iShares.com.au
IMPORTANT INFORMATION
Before investing in an iShares exchange traded fund, you should carefully consider whether such products are appropriate for you, read the applicable
prospectus or product disclosure statement (“PDS”) available atiShares.com.au and consult an investment adviser.
Issued by BlackRock Investment (Management) Australia Limited ABN 13 006 165 975 AFSL 230 523 (“BIMAL”), a wholly owned subsidiary of BlackRock, Inc.
(collectively “BlackRock”).
BlackRock believes the information in this document is correct at the time of issue, but no warranty of accuracy or reliability is given and no responsibility
arising in any way for errors or omissions (including responsibility to any person by reason of negligence) is accepted by BlackRock.
This information is general in nature, and has been prepared without taking into account any individual’s objectives, financial situation, or needs.
Transaction costs are incurred when buying or selling shares of an iShares fund on the Australian Securities Exchange (“ASX”) and brokerage commissions if
such trades are done through a broker.
Neither the performance nor the repayment of capital or any income (dividends) of an iShares fund is guaranteed by any BlackRock entity. Past performance
is not a reliable indicator of future performance.
Shares of an iShares fund trade on ASX at market price (not, net asset value (“NAV”)). Shares may only be redeemed directly from an iShares fund by persons
called “Authorised Participants”.
Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s (“S&P”), a division of The McGraw-Hill Companies, Inc. (“McGraw-Hill”).
The iShares funds are not sponsored, endorsed, issued, sold or promoted by S&P or McGraw-Hill. Each of these companies has licensed the use of their
respective trademarks and servicemarks to BlackRock Fund Advisors. Neither of these companies make any representation, warranty or condition regarding
the advisability of buying, selling or holding shares in an iShares fund.
BIMAL is the local agent and intermediary for international iShares funds issued by iShares (iShares, Inc. ARBN 125632 279 formed in Maryland, USA; iShares
Trust ARBN 125 632 411 organised in Delaware, USA. The liability of shareholders is limited). BlackRock Fund Advisors (“BFA”) serves as an advisor to the
iShares funds that are registered with the United States Securities and Exchange Commission under the Investment Company Act of 1940. iShares® and
BlackRock® are registered trademarks of BlackRock, Inc., or its subsidiaries in the United States and elsewhere.
©2015 BlackRock, Inc. All rights reserved. iSHARES® and BLACKROCK® are registered trademarks of BlackRock, Inc., or its subsidiaries. All other marks are
the property of their respective owners.
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