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| Benefits of ETFs |
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| The unique structure of ETFs provides investors with a number of benefits |
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| Lower Cost |
| ETFs are a lower-cost alternative to traditional mutual funds, with expense ratios that are typically well below those of both active, and index mutual funds. For example, most iShares funds carry expense ratios from 9 to 75 basis points which are substantially lower than the average active mutual fund which typically can carry expense ratios over 100 basis points. While ETF transactions will most likely generate brokerage commissions, their lower expenses can offset those transaction costs for long-term investors. |
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| Diversion |
| Since most ETFs track indexes which are comprised of a basket of securities, they inherently provide instant diversification and are expected to minimize capital gains distributions through lower portfolio turnover than actively managed funds. Unlike traditional mutual funds where shareholder activity can contribute to capital gains distributions, an ETFs' creation and redemption structure eliminates the impact of shareholder activity on capital gains |
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| Tex Efficienty |
| distributions thereby making them more tax efficient. |
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| Transparency and Modularity |
| ETFs are required to disclose on a daily basis the exact holdings of the fund so you always understand precisely what you own and how much you're paying for it. This level of transparency is not disclosed by actively managed funds. With over 150 iShares funds available and tracking different indexes, investors can use the modularity of ETFs to create portfolios with different asset class exposures and risk profiles. |
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| www.ishares.com |
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