Just How 'Core' Is iShares' 'Core' Series of ETFs?
We take a closer look at iShares' low-cost suite of portfolio building blocks to find an answer.
Last October, iShares launched its so-called "core" series of ETFs. IShares, and its parent company, BlackRock (BLK), have long been well-regarded by institutional investors and financial advisors. However, the firm has been less successful with individual investors, as evidenced by years of market share losses to Vanguard. The launch of the iShares "core" series is part of a broader push by BlackRock and iShares to boost brand recognition among individual investors. But what's the result? Is this just a marketing gimmick, or has iShares created a truly useful set of "core" portfolio building blocks?
What Constitutes a Solid 'Core'?
Most investors' portfolios tend to follow either a strategic or tactical asset-allocation approach, or some combination of the two. The strategic approach is rooted in the efficient markets hypothesis, which suggests that investors weight all assets by their market capitalization and attempt to achieve optimal diversification. Investors' strategic asset allocations will differ on the basis of risk tolerance and income needs. On the other hand, tactical asset allocation allows for the selective overweighting (or underweighting) of certain asset classes or securities that are expected to outperform (or underperform). A portfolio employing a tactical asset allocation will look different than the market portfolio, and different tactical investors will hold different portfolios depending on their market outlook.
Michael Rawson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.