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The iShares Empire Strikes Back ... With Low Fee Funds

Now with a "Core" series of ETFs, BlackRock is looking to have its cake and eat it, too.

Paul Justice, CFA, 10/24/2012

This week BlackRock launched  a "Core" series of ETFs, which is really a branding scheme around six existing funds and four new launches. If you’ve been watching the financial news channels or stuck around after the presidential debates, you’ve probably already seen the commercials. The firm is pitching 10 funds as core building blocks aimed at long-term-minded investors. We wholeheartedly agree with their pitch: All 10 are low-cost, effective tools with which investors can build an effective and balanced portfolio. These funds possess all the aspects we like about ETFs when used by investors over the long haul.

What We Really Like
It’s hard to come up with criticisms for a fund company that is already a low-cost provider when it decides to cut fees even further, but the nature of this program has so many interesting angles that we’d be remiss not to try and figure out why they chose this route. Let’s start with what we really like: the fee cuts to six large, existing funds. Though these funds will have modified names going forward, both existing and new investors will find much to like about these funds.

IShares S&P 1500 Index ISI became iShares Core S&P Total US Stock Market ETF ITOT and saw its expense ratio drop to 0.07% from 0.20%.

IShares S&P 500 Index IVV became iShares Core S&P 500 ETF and saw its expense ratio fall to 0.07% from 0.09%.

IShares S&P MidCap 400 Index IJH became iShares Core S&P Mid-Cap ETF and saw its expense ratio drop to 0.15% from 0.21%.

IShares S&P SmallCap 600 Index IJR became iShares Core S&P Small-Cap ETF and saw its price fall to 0.16% from 0.20%.

IShares Barclays Aggregate Bond AGG became iShares Core Total US Bond Market ETF and saw its expense ratio drop to 0.08% from 0.22%.

IShares 10+ Year Government/Credit Bond Fund GLJ became iShares Core Long-Term US Bond ETF ILTB and saw its expense ratio fall to 0.12% from 0.20%.

Paul Justice is the Director of ETF Research in North America for Morningstar and ETFInvestor contributor. Click here for a free issue.

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