Panel event: Managing risk in 3 dimensions€¦ · panel event: managing risk in 3 dimensions may...
Transcript of Panel event: Managing risk in 3 dimensions€¦ · panel event: managing risk in 3 dimensions may...
PANEL EVENT:MANAGING RISK IN 3 DIMENSIONS
May 20, 2020
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Moderator
Michael Pollock
Regional Brokerage Consultant
Fidelity Investments
Panelist
Karen Schenone, CFA®
Head of iShares Fixed Income Strategy
BlackRock
Panelist
Holly Framsted, CFA®
Head of iShares Factor ETFs
BlackRock
Panelist
Sarah Kjellberg
Head of iShares Sustainable ETFs
BlackRock
Panel event: Managing risk in 3 dimensions
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Diversification can help you achieve long term goals, even if it doesn’t feel that way in the short term
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Source: Morningstar as of 3/31/20. *Performance is from 3/31/2000 to 12/31/2002. **Performance is YTD as of 3/31/20. “Diversified Portfolio” is represented by 40% S&P 500 Index, 15% MSCI EAFE Index, 5% Russell 2000 Index, 30% Bloomberg Barclays US Aggregate Bond Index, and 10% Bloomberg Barclays US Corporate High Yield Index. The strategies discussed are strictly for illustrative and educational purposes and are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. There is no guarantee that any strategies discussed will be effective. Index performance is for illustrative purposes only. Index performance does not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results.
Years S&P 500 Diversified Portfolio
2000*-2002 (39.0%) (17.7%) “I lost money”
2003-2007 82.9% 73.8% “I didn’t make as much”
2008 (37.0%) (24.0%) “I lost money”
2009-2019 351.0% 191.7% “I didn’t make as much”
2020** (19.6%) (13.1%) “I lost money”
Total Return 154.8% 175.6% “Diversification can help achieve long term goals, even if it doesn’t always feel that way”Growth of $100k $254,794 $275,556
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Bond ETFs
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Get started with the BlackRock Bond Pyramid
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A portfolio of your best ideas may not be your best portfolio. Take into consideration the role each fund plays to optimize your bond mix based on your larger asset allocation.
Consistent returns across all markets
Protection when stocks sell off
Higher income
You seek…
IncomeCredit / high yield
Capital preservationLow duration / flexible strategies
Equity diversificationCore bonds, investment grade, longer duration
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Tailor your bonds to your overall portfolio
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Your overall asset allocation determines the mix of funds you should hold in your Bond Pyramid.The more aggressive the overall portfolio gets, the more conservative the bonds may need to be.
This information should not be relied upon as research, investment advice or a recommendation regarding the Funds or any security in particular. This information is strictly for illustrative and educational purposes and is subject to change. This information does not represent the actual current, past or future holdings within the portfolio of any BlackRock client.
Aggressive portfolioswith majority stocks
20 – 30%
20 – 40%
40 – 60%
20 – 40%
60 – 80%
0 - 10%
Conservative portfolioswith majority bonds
The bond paradox
As your overall portfolio gets riskier, the bonds within it should be more conservative. Aggressive portfolios typically need duration and high credit quality to deliver equity diversification.
Income Capital preservation Equity diversification
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Strong performance during COVID-19 crisis
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Many ETFs posted top quartile performance as mutual funds were dragged down by credit overweights.
THE SITUATIONBond mutual funds typically dip into
high yield to boost returns
THE RESULTBond ETFs provided needed diversification
during the Q1 2020 sell off
AGGMorningstar Intermediate Core Bond Category
IUSBMorningstar Intermediate Core-Plus Bond Category
LQDMorningstar Corporate Bond Category
Core Plus Bond
Category average
Core Bond Category average
AGG is 0%high yield…
0%high yield
2% high yield
12% high yield
Source: Morningstar as of 3/31/20. The percentage high yield is inclusive of non-rated bonds.
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LQDCorporates
Bond ETFs improved liquidity
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This is the modernization of the bond market in action. The world’s largest capital market, U.S. bonds, is finally moving to the transparency and liquidity of exchange trading.
Source: Bloomberg, as of 03/31/2020. * Q1 2020. There can be no assurance that an active trading market for shares of an ETF will develop or be maintained. Case study shown for illustrative purposes only. This is not meant as a guarantee of any future result or experience. This information should not be relied upon as research, investment advice or a recommendation regarding the iShares Funds or any security in particular.
$3.1
$2.3
$1.0
$1.7
$1.1
$0.5
Trading volumes skyrocketed during the COVID-19 crisis
2019 COVID-19 crisis*
HYGHigh Yield
AGGCore
Average daily trading volume ($ bn)
LQD case study
On March 12, one of the worst days for U.S. stocks, LQD changed hands almost 90,000 times. This is 2,000x greater than its top five corporate bond holdings, which traded only 37 times on average.
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Factor ETFs
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How do you build portfolios?
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Value Blend Growth
Large
Mid
Small
The newstyle box
Modernizethe traditional
9-box grid
Large Value Large Blend Large Growth
Market cap weighted
SEEK MARKET RETURNS
Smart beta
SEEK OUTPERFORMANCE
Smart beta
SEEK REDUCED VOLATILITY
Morningstar category
USMV0.15%
IUSV0.04%
IVV0.04%
IUSG0.04%
VLUE0.15%
QUAL0.15%
MTUM0.15%
Expense ratios are shown below ticker symbols.
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How do you build portfolios?
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Expand your horizons
Use factors around the globe
U.S. International Emerging Markets
Market cap weighted
SEEK MARKET RETURNS
Smart beta
SEEK OUTPERFORMANCE
Smart beta
SEEK REDUCED VOLATILITY
Morningstar category
EFAV0.20%*
ITOT0.03%
IEFA0.07%
IEMG0.13%
LRGF0.20%
INTF0.30%
EMGF0.45%
USMV0.15%
EEMV0.25%*
Expense ratios are shown below ticker symbols.
Large Value
Large Value Foreign Large Blend
Foreign Large Blend Diversified EM
Diversified EM
*Net expense ratios shown for EFAV and EEMV reflect contractual fee waivers in place until 11/30/21 and 12/31/23 respectively. Gross expense ratios are 0.32%, and 0.68%, respectively.
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The arithmetic of losses
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It’s hard climbing back uphill – the return needed to recover increases exponentially as losses increase.
A long way back to break even
Investment loss Return needed to break even
-1% +1.01%
-5% +5.3%
-10% +11%
-20% +25%
-30% +43%
-40% +67%
-50% +100%
$1
$0.50
$1
Source: BlackRock.
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Losing less can lead to earning more
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Asymmetric upside/downside capture can lead to a better outcome
Growth of a hypothetical $100k in the S&P 500 Index over the last two bear and bull markets
$100K
Low volatility (44% upside/44% downside)
S&P 500 Index (100% upside/100% downside)
Scenario
Upside/downside Ending value
S&P 500 Index100%/100%
$250K
Low volatility1
44%/44%$251k
Other scenarios
Upside/downside Ending value
More up than down2
60%/50%$319K
$251k
-20%
-9%
2000 2003 20092006 2012 20182015 2020
Source: Morningstar as of 8/31/00 - 3/31/20. 1 Source: Hypothetical ending value if $100K was invested in the S&P 500 index and captured 61% of the upside and downside over last two bear and bull market cycles. 44% upside/downside is used to demonstrate what symmetric capture ratio is needed to equal the same approximate ending value of the S&P 500 over the last two bull and bear market. This illustrates how an investor could have achieved similar growth of the S&P 500 without experiencing the higher volatility. 2 Source: Hypothetical amount if $100K was invested in the S&P500 index and captured 60% of the upside and 50% of the downside over the last two bear and bull markets. 60%/50% was chosen since it illustrates the importance of asymmetric (more up than down) upside/downside capture. Index performance is for illustrative purposes only. Index performance does not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results.
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Time in the market, not timing the market
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Missing top-performing days can hurt your returnHypothetical $100,000 investment in the S&P 500 Index
over the last 20 years (1999-2018)
Don’t miss out when markets snap back
24 of the 25 worst days in the market were within one month of one of the 25 best days
$215K
$162K
$127K
$102K$82K
Stayed Invested Missed 5 days Missed 10 days Missed 15 days Missed 20 days Missed 25 days
$324K
Source: BlackRock; Bloomberg as of 12/31/19. Stocks are represented by the S&P 500 Index, an unmanaged index that is generally considered representative of the US stock market. Past performance is no guarantee of future results. It is not possible to invest directly in an index. Past performance does not guarantee or indicate future results.
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Sustainable ETFs
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What is Sustainable investing?
Well-run company with high-level risk controls
Less exposure to environmental risk
Attraction / retention of skilled workers and
customers
Climate Change
Pollution & Waste
Environmental Opportunities
EHuman Capital
Product Liability
Social Opportunities
SCorporate Governance
Ethics
Corruption & Instability
G
16
Sustainable investing combines traditional security analysis with environmental, social and governance (ESG) insights.
Sustainable investing is the umbrella category of investment strategies.ESG describes the metrics that drive sustainable security selection.
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Environmental, Social, and Governance (ESG) is an important component of a robust investment processESG issues can have real financial impact. To pursue competitive risk-adjusted returns, investors should consider the full set of risks & opportunities facing a company, and that includes ESG issues.
Op
po
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nit
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Ris
ks
Water efficiency
Workforce diversity
Energy use
Supply chain management
Clean tech
Datasecurity
Extremeweather
Productquality
Fraud Health &safety
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Recognition that sustainability influences risk and return
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Index performance is for illustrative purposes only. Index performance does not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Performance data represents past performance and does not guarantee future results. Investment return and principal value will fluctuate with market conditions and may be lower or higher when you sell your shares. Current performance may differ from the performance shown. For most recent month-end performance see www.iShares.com. For standardized performance and to see how the funds performed against these indexes during other time periods, please see the end of this document. The index shown is the parent index of the index that the fund seeks to track. There may be material differences between the fund's
index and the index shown including without limitation holdings, methodology and performance. Financial Crisis measured 10/10/07 – 03/09/09. Coronavirus measured 02/21/20 – 03/13/20. To see how iShares sustainable funds performed in other market sell-offs, see the end of this document
-19.96
-18.84-19.06
-17.61
-18.86-18.75
Coronavirus (2020)
-55.21 -53.89 -54.86-53.89
Global Financial Crisis (2007-2009)
MSCI USA IMI SUSLSUSADSI MSCI USA ESGU
Performance of iShares ESG U.S. Equity ETFs vs broad benchmarks during different market sell-offs – NAV Total Return (%)
Pa
ren
t In
de
x
Pa
ren
t In
de
x
Pa
ren
t In
de
x
Pa
ren
t In
de
x
ESG ETFs may help investors manage market downturns since companies with strong ESG characteristics may be better positioned to manage sustainability-related risks
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There are many approaches to incorporate sustainability in your investing
Avoid Advance
Broad ESG ImpactExclusionary Screens
Thematic ESG
…keep broad market exposure, while investing in companies that best manage ESG risks & opportunities”
…invest to help directly and measurably address large global issues”
…avoid companies and industries that don’t align with my values”
…focus on a particular E, S or G issue, like reducing my carbon footprint or investing in clean energy”
ESG
I am looking to…
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Broad ESG Thematic ESG Impact
iShares Sustainable ETFs provide solutions to serve a range of investment objectives
Int’l
Global Sustainable Impact
US 1-5 Yr. Corporate
SUSB0.12% SDG
0.49%
Stocks Bonds
US Corporate
SUSC0.18%
US Aggregate
EAGG0.10%1
US
ESGU0.15%
ESGD0.20%
Emerging Markets
ESGE0.25%
Global Low Carbon
CRBN0.20%
Global Clean Energy
ICLN0.46%
US
DSI0.25%
US
SUSA0.25%
ESG Aware
US Small Cap
ESML0.17%
Global Green Bonds
BGRN0.20%2
Expense ratios are shown below the fund ticker symbols. 1. Net expense ratio shown for EAGG reflects contractual fee waiver in place until 6/30/2024. Gross expense ratio is 0.11%. 2. Net expense ratio shown for BGRN reflects contractual fee waiver in place until 3/1/2020. Gross expense ratio is 0.25%.
US
SUSL0.10%
LDEM0.16%
Emerging Markets
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iShares ESG Aware ETFs
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Seek to achieve a higher ESG Quality score while pursuing similar risk and return as the relevant broad market
1.. Source for MSCI ESG Quality Score for the funds : MSCI ESG Fund Ratings as of 01/02/2020, based on holdings as of 11/30/2019. Source for MSCI ESG Quality Score for the indexes: MSCI ESG Research as of 01/02/2020, based on holdings as of 11/30/2019 The indexes shown are the parent indexes of the indexes that the funds seek to track. There may be material differences between the fund's index and the index shown including without limitation holdings, methodology and performance. US Large & Mid Cap ETF is ESGU and parent index is the MSCI USA Index (99.5% of securities covered by MSCI Research); International Developed Markets ETF is ESGD and parent index is the MSCI EAFE Index (99.8% of securities covered by MSCI Research); Emerging Markets ETF is ESGE and parent index is the MSCI Emerging Markets Index (99.0% of securities covered by MSCI Research); US Small Cap ETF is ESML and parent index is MSCI USA Small Cap Index (98.6% of securities covered by MSCI Research). US Corporate ETF is SUSC and parent index is the Bloomberg Barclays US Corporate Index (98.2% of securities covered by MSCI Research). 1-5Yr US Corporate ETF is SUSB and parent index is the Bloomberg Barclays US Corporate 1-5 Year Index (98.8% of securities covered by MSCI Research) Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results. For more information about MSCI ESG Fund Ratings, see the section entitled Important Information regarding iShares Sustainable ETFs at the end of this document.
ESGU
ESGDESGE
ESML
EAGG
SUSC SUSBPerformanceSeek to achieve a more sustainable outcome while pursuing your financial goals
QualityCompanies with positive ESG business practices are best positioned for the long-term
AccessUse sustainable building blocks across asset classes, geographies for your core portfolio
1
2
3
7.0
8.4
6.85.8
6.57.1
5.66.8
4.6 4.35.0 4.9
US Large & Mid Cap International DevelopedMarkets
Emerging Markets US Small Cap US Corporate 1-5Yr US Corporate
iShares ESG Equity ETF1 Parent Index1iShares ESG Fixed Income ETF1
ES
G Q
ua
lity
Sc
ore
iShares ESG Aware ETFs achieve higher ESG Scores by 35%1 and
reduce carbon intensity by 36%2 on average, compared to broad market indices
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ETFs can offer investors many tools to navigate risk in both volatile and calm markets. A few tools covered today:
Bond ETFs
• Bonds can be used for equity market diversification, stability and income
• There are many types of bond ETFs designed to help you seek to achieve your specific goals
• Bond ETFs can help lower costs and add liquidity and to portfolios
Factor ETFs
• Diversification within stocks through factors can help to balance risk within the US and internationally
• Minimum volatility investing, like diversification, can help you seek better results by losing less and staying invested
Sustainable ETFs
• ESG insights reveal risks and opportunities that aren’t typically captured in traditional financial analysis
• ESG ETFs provide exposure to high-quality companies who are better positioned to manage sustainability risks which can help investors make progress towards their investment goals, in any market environment
In summary
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Get started with ETFs discussed today
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AGG
IUSB
Multi-sector investment grade bonds
Multi-sector investment grade and high yield bonds
Bonds
LQD
Investment grade corporate bonds
USMV
VLUE
U.S. stocks minimum volatility factor
U.S. stocks value factor
Factors
QUAL U.S. stocks quality factor
EAGG
ESGU
ESG aware multi-sector investment grade bonds
ESG aware U.S. large and mid cap stocks
Sustainable
ESGD
ESG aware international developed large and mid cap stocks
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APPENDIX
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Recognition that sustainability influences risk and return –additional performance during different market sell-offs
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Performance of the broad-based iShares ESG U.S. Equity ETFs vs broad benchmarks during different market sell-offs – NAV Total Return (%)
ETFLarge/Mid cap
Parent Index
ETFAll cap
Parent Index
ESGU SUSL SUSA MSCI USA DSI MSCI USA IMI
Coronavirus (2020) Cum. Ret. %
-18.75% -18.86% -17.61% -19.06% -18.84% -19.96%
Fed Policy Reaction (2018) Cum. Ret. %
-19.58% - -19.26% -19.53% -18.33% -20.18%
Energy and EM Downturn (2015-2016) Cum. Ret. % - - -12.33% -13.47% -12.49% -14.52%
US Credit Downgrade (2011) Cum. Ret. %
- - -17.24% -17.70% -16.62% -18.95%
Global Financial Crisis (2007-2009) Cum. Ret. %
- - -53.89% -54.86% -53.89% -55.21%
Index performance is for illustrative purposes only. Index performance does not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Performance data represents past performance and does not guarantee future results. Investment return and principal value will fluctuate with market conditions and may be lower or higher when you sell your shares. Current performance may differ from the performance shown. For most recent month-end performance see www.iShares.com. For standardized performance and to see how the funds performed against these indexes during other time periods, please see the next page. The index shown is the parent index of the index that the fund seeks to track. There may be material differences between the fund's index and the index shown including without limitation holdings, methodology and performance. Financial Crisis measured 10/10/07 – 03/09/09, US Credit Rating Downgrade measured 07/25/11 – 10/03/11, Energy and EM Downturn measured 07/21/15 – 02/11/16, Fed Policy Reaction measured 09/20/18 – 12/24/18. Coronavirus measured 02/21/20 – 03/13/20.
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Standardized performance as of 3/31/20
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On 6/1/2018 ESGU began to track the MSCI USA Extended ESG Focus Index. Historical Index data prior to 6/1/2018 is for the MSCI USA ESG Focus Index; Index data on and after 6/1/2018 is MSCI USA Extended ESG Focus Index.
On 6/1/2018 SUSA began to track the MSCI USA Extended ESG Select Index. Historical Index data prior to 6/1/2018 is for the MSCI USA ESG Select Index; Index data on and after 6/1/2018 is MSCI USA Extended ESG Select Index.
The performance quoted represents past performance of specific funds and does not guarantee future results for such funds. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by visiting www.iShares.com or www.blackrock.com.
Shares of iShares Funds are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Market returns are based upon the midpoint of the bid/ask spread at 4:00 p.m. eastern time (when NAV is normally determined f or most iShares Funds), and do not represent the returns you would receive if you traded shares at other times. Performance shown reflects fee waivers and/or expense reimbursements by the investment advisor to the fund for some or all of the periods shown. Performance would have been lower without such waivers.
Fund Name: Fees as of Current Prospectus. All Other Data as of 03/31/2020 Fund Inception Date 1-Year 5-Year 10-Year Since ETF Inception
iShares ESG MSCI USA ETF (ESGU) 12/1/2016
Fund NAV Total Return -5.90% -- -- 7.56%
Fund Market Price Total Return -5.88% -- -- 7.56%
Fund’s Index Total Return -5.72% -- -- 7.77%
MSCI USA Index Total Return (Parent Index) -7.14% 6.55% 10.50% 7.17%
iShares ESG MSCI USA Leaders ETF (SUSL) 5/7/2019
Fund NAV Total Return -- -- -- -6.83%
Fund Market Price Total Return -- -- -- -6.77%
Fund’s Index Total Return -- -- -- -6.77%
MSCI USA Index Total Return (Parent Index) -7.14% 6.55% 10.50% -9.77%
iShares MSCI USA ESG Select ETF (SUSA) 1/24/2005
Fund NAV Total Return -5.57% 6.74% 9.62% 7.00%
Fund Market Price Total Return -5.57% 6.74% 9.62% 7.00%
Fund’s Index Total Return -5.32% 7.18% 10.13% 7.51%
MSCI USA Index Total Return (Parent Index) -7.14% 6.55% 10.50% 7.68%
iShares MSCI KLD 400 Social ETF (DSI) 11/14/2006
Fund NAV Total Return -6.01% 6.41% 9.76% 6.65%
Fund Market Price Total Return -6.02% 6.41% 9.76% 6.65%
Fund’s Index Total Return -5.77% 6.85% 10.27% 7.15%
MSCI USA IMI Index Total Return (Parent Index) -9.18% 5.82% 10.21% 6.92%
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MSCI ESG Fund Ratings as of 1/2/2019
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Ticker NameESG Quality Score – Peer
PercentileFund Lipper Peer Group
# of Funds in Lipper Global
Group
ESG Quality Score
Weighted Average Carbon Intensity
Sustainable Impact %
ESG % Coverage
Holdings Date
IVV iShares Core S&P 500 ETF 62 Equity US 2713 5.70 173.1 5.26 98.70 11/30/2019
ACWI iShares MSCI ACWI ETF 34 Equity Global 2528 5.92 181.0 5.70 97.90 11/30/2019
BGRN iShares Global Green Bond ETF 96 Bond Global USD 296 6.97 431.2 3.64 94.02 11/30/2019
CRBN iShares MSCI ACWI Low Carbon Target ETF - Unclassified 98 5.91 56.1 5.78 99.02 11/30/2019
DSI iShares MSCI KLD 400 Social ETF 98 Equity US 2713 7.09 124.9 9.00 98.79 11/30/2019
ESGD iShares ESG MSCI EAFE ETF 98 Equity Global ex US 738 8.43 139.7 8.62 99.97 11/30/2019
ESGE iShares ESG MSCI EM ETF 98 Equity Emerging Mkts Global 920 6.80 208.5 6.32 99.50 11/30/2019
ESGU iShares ESG MSCI USA ETF 97 Equity US 2713 7.04 147.7 7.04 98.69 11/30/2019
ESML iShares ESG MSCI USA Small-Cap ETF 98 Equity US Sm&Mid Cap 1310 5.77 112.4 9.01 98.55 11/30/2019
ICLN iShares Global Clean Energy ETF84
Equity Theme - Natural Resources 170 6.43 227.3 73.92 95.08
11/30/2019
SDG iShares MSCI Global Impact ETF - Unclassified 98 7.31 145.5 71.82 99.03 11/30/2019
SUSA iShares MSCI USA ESG Select ETF 100 Equity US 2713 8.52 105.0 9.69 99.18 11/30/2019
SUSB iShares ESG 1-5 Year USD Corporate Bond ETF 100 Bond USD Medium Term 145 7.13 181.4 4.78 96.56 11/30/2019
SUSC iShares ESG USD Corporate Bond ETF 88 Bond USD Medium Term 145 6.48 305.2 5.24 97.52 11/30/2019
SUSL iShares ESG MSCI USA Leaders ETF 99 Equity US 2713 7.41 159.0 8.94 98.47 11/30/2019
MSCI ESG Quality Score % Rank measures how a fund's overall ESG Quality Score ranks relative to other funds in the same peer group. The peer group is based on the Lipper Global Classification and reflects the funds that are inthe MSCI ESG Fund Ratings coverage universe. 100th percentile represents the best rank.
The MSCI ESG Quality Score (0 - 10) for funds is calculated using the weighted average of the ESG scores of fund holdings. The Score also considers ESG Rating trend of holdings and the fund exposure to holdings in the laggardcategory. MSCI rates underlying holdings according to their exposure to 37 industry specific ESG risks and their ability to manage those risks relative to peers. These issuer-level ESG ratings correspond to an issuer-level ESG Score.
The Weighted Average Carbon Intensity measures a fund's exposure to carbon intensive companies. This figure represents the estimated greenhouse gas emissions per $1 million in sales across the fund’s holdings. The figure is asum of the normalized security weight multiplied by the security Carbon Intensity. This allows for comparisons between funds of different sizes. It is measured in tons CO2/$M sales.
Sustainable Impact % reflects the extent to which company revenue is exposed to products and services that help solve the world's major social and environmental challenges. It is calculated as a weighted average, using portfolioweights and each issuer's percent of revenue generated from Sustainable Impact Solutions as outlined by the United Nations’ Sustainable Development Goals framework.
Controversy Score is measured on a scale of 0-10 (0 represents most severe controversy). Controversy scores consider a company’s significant ESG impacts by identifying company involvement in major ESG controversies,adherence to international norms and principles, and assessing company performance with respect to these norms and principles.
To be included in MSCI ESG Fund Ratings, 65% of the fund’s gross weight (excluding cash positions) must come from securities covered by MSCI ESG Research, the fund’s holdings date must be less than one year old, and the fundmust have at least ten securities. Past ESG metrics are not indicative of future results.
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About MSCI ESGResearch
MSCI ESG Research provides in-depth research, ratings and analysis of the environmental, social and governance-related business practices of thousands of companies worldwide. Our research is designed to provide critical insights that investors may use as part of their implementation of responsible investment objectives and to identify environmental, social and governance risks and opportunities that traditional investment research may overlook.
MSCI ESG Research data and ratings are used in the construction of the MSCI ESG Indexes. Our suite of over 900 equity and fixed income indexes are designed to help institutional investors more effectively benchmark ESG investment performance, issue index- based investment products, as well as manage, measure and report on ESGmandates.
MSCI Disclaimer
Certain information ©2020 MSCI ESG Research LLC. Reproduced by permission; no further distribution.
Certain information contained herein (the “Information”) has been provided by MSCI ESG Research LLC, a RIA under the Investment Advisers Act of 1940, and may include data from its affiliates (including MSCI Inc. and its subsidiaries (“MSCI”)), or third party suppliers (each an “Information Provider”), and it may not be reproduced or redisseminated in whole or in part without prior written permission. The Information has not been submitted to, nor received approval from, the US SEC or any other regulatory body. The Information may not be used to create any derivative works, or in connection with, nor does it constitute, an offer to buy or sell, or a promotion or recommendation of, any security, financial instrument or product or trading strategy, nor should it be taken as an indication or guarantee of any future performance, analysis, forecast or prediction. Some funds may be based on or linked to MSCI indexes, and MSCI may be compensated based on the fund’s assets under management or other measures. MSCI has established an information barrier between equity index research and certain Information. None of the Information in and of itself can be used to determine which securities to buy or sell or when to buy or sell them. The Information is provided “as is” and the user of the Information assumes the entire risk of any use it may make or permit to be made of the Information. Neither MSCI ESG Research nor any Information Party makes any representations or express or implied warranties (which are expressly disclaimed), nor shall they incur liability for any errors or omissions in the Information, or for any damages related thereto. The foregoing shall not exclude or limit any liability that may not by applicable law be excluded or limited.
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Important information about MSCI
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Carefully consider the Funds' investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the Funds' prospectuses or, if available, the summary prospectuses which may be obtained by visiting www.iShares.com or www.blackrock.com. Read the prospectus carefully before investing.
Investing involves risk, including possible loss of principal.
A fund's environmental, social and governance (“ESG”) investment strategy limits the types and number of investment opportunities available to the fund and, as a result, the fund may underperform other funds that do not have an ESG focus. A fund's ESG investment strategy may result in the fund investing in securities or industry sectors that underperform the market as a whole or underperform other funds screened for ESG standards.
The iShares MSCI ACWI Low Carbon Target ETF may not reflect a lower carbon exposure as there is no guarantee that the underlying index will achieve its intended results or accurately assess an issuer's actual and potential carbon emissions.
Fixed income risks include interest-rate and credit risk. Typically, when interest rates rise, there is a corresponding decline in bond values. Credit risk refers to the possibility that the bond issuer will not be able to make principal and interest payments.
International investing involves risks, including risks related to foreign currency, limited liquidity, less government regulation and the possibility of substantial volatility due to adverse political, economic or other developments. These risks often areheightened for investments in emerging/developing markets, in concentrations of single countries or smaller capital markets.
Funds that concentrate investments in specific industries, sectors, markets or asset classes may underperform or be more volatile than other industries, sectors, markets or asset classes and than the general securities market. Small-capitalization companies may be less stable and more susceptible to adverse developments, and their securities may be more volatile and less liquid than larger capitalization companies.
This information should not be relied upon as research, investment advice, or a recommendation regarding any products, strategies, or any security in particular. This material is strictly for illustrative, educational, or informational purposes and is subject to change.
Information on non-iShares Fund securities is provided strictly for illustrative purposes and should not be deemed an offer to sell or a solicitation of an offer to buy shares of any security other than the iShares Funds, that are described in this material.
iShares ETFs trade commission-free with select custodians. Some restrictions may apply. Transactions in shares of ETFs may result in brokerage commissions and will generate tax consequences. All regulated investment companies are obliged to distribute portfolio gains to shareholders. Talk to a financial advisor before making an investment decision.
Before engaging Fidelity or any broker-dealer, you should evaluate the overall fees and charges of the firm as well as the services provided. Free commission offer applies to online purchases of iShares ETFs in a Fidelity retail account. The sale of ETFs is subject to an activity assessment fee (from $0.01 to $0.03 per $1,000 of principal). Other exclusions and conditions may apply. For iShares ETFs, Fidelity receives compensation from the ETF sponsor and/or its affiliates in connection with an exclusive long-term marketing program that includes promotion of iShares ETFs and inclusion of iShares funds in certain FBS platforms and investment programs. Please note, this security will not be marginable for 30 days from the settlement date, at which time it will automatically become eligible for margin collateral. Additional information about the sources, amounts, and terms of compensation can be found in the ETF’s prospectus and related documents. Fidelity may add or waive commissions on ETFs without prior notice.
The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”). The iShares Funds are not sponsored, endorsed, issued, sold or promoted by Barclays, Bloomberg Finance L.P., MSCI Inc. or S&P Dow Jones Indices LLC. None of these companies make any representation regarding the advisability of investing in the Funds. BlackRock Investments, LLC is not affiliated with the companies listed above.
©2020 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.
The information provided in this communication is solely for educational purposes and should not be construed as advice or an investment recommendation. Fidelity Investments is a separate company, unaffiliated with BlackRock, Inc.. There is no form of partnership, agency affiliation, or similar relationship between BlackRock, Inc. and Fidelity Investments, nor is such a relationship created or implied by the information herein. Fidelity Investments has not been involved with the preparation of the content supplied by BlackRock, Inc. and does not guarantee or assume any responsibility for its accuracy or completeness.
Important information regarding iShares ETFs
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