FORBES BRAND VOICE With iShares

INVEST WITH A PURPOSE

Invest With A Purpose: Create Value And Make An Impact With ETFs

Your money should work for you—and that means not just pursuing yield but also helping you capitalize on your convictions in the process.

Whether it’s setting you up for retirement or allowing you to support the causes you care most about, your investment strategy can help you pursue your financial, personal and ethical goals.

To help achieve progress in an ever-changing world, consider exchange-traded funds, or ETFs. An ETF is a diversified collection of assets (like a mutual fund) that trades on an exchange (like a stock).

Keep reading to learn how ETFs have transformed investing and how they can help you build a better future.

In 2007, a legendary investor and philanthropist took a $1 million wager that an index fund would outperform a collection of hedge funds over the course of a decade. At the end of the decade, he won the bet.1

We’re not suggesting placing bets. While index investing bested hedge funds in this case, it does not necessarily mean it will happen again. Still, the results of this bet are worth noting since they illustrate the potential of index investing and ETFs.

ETFs generally seek to track an index of stocks, bonds or other securities. They can be broad market indexes like the S&P 500, Nasdaq or Bloomberg Barclays US Aggregate Bond Index; more targeted regional indexes; or even niche indexes.

ETFs can have hundreds of securities in their portfolios, creating diversification that may help reduce risk when compared with owning individual stocks. There is also an opportunity to further diversify by building a core portfolio of multiple ETFs, each of which may hold different types of securities across asset classes.

By offering investors choice, value and accessibility, ETF adoption is accelerating. The 21st century began with less than $100 billion in ETF assets; as of 2018, the ETF world counts $4.7 trillion globally in assets and an expanding number of products.2 BlackRock projects that ETF assets will grow to over $12 trillion by 2023.3

There are some 1,800 ETFs listed in the United States,4 and iShares, BlackRock’s ETF business, offers more than 300 in the U.S. and over 800 globally,5 representing a broad range of asset classes and geographical regions. You can curate a portfolio of ETFs that best suits you, your goals and your passions.

With sustainable iShares ETFs, you don’t have to separate your investment choices from your personal beliefs. If you are an environmentalist, you can invest in companies committed to positive environmental, social and governance (ESG) business practices. Or if you’re looking to invest in the long-term forces shaping our future, megatrend ETFs offer access to companies driving advances and shaping our global economy and society.

THE ETF REVOLUTION IS HERE

HELP BUILD A BETTER FUTURE WITH SUSTAINABLE ETFs

VALUE

Investing in actively managed mutual funds can be costly, as professional asset managers need to be paid for their decision making. iShares ETFs are:

Over 10 years, a hypothetical $10,000 investment in an active open-end mutual fund charging 0.96% in fees, with monthly contributions of $1,000 and an assumed compounded rate of return of 8%, would grow to $190,450 and lead to $11,264 in fees.8 Everything else being equal, the same amounts invested in an ETF charging 0.34% in fees would grow to $197,632 and lead to only $4,081 in fees.9

ACCESSIBILITY

One key benefit of ETFs is that you can buy and sell them throughout the day, just like stocks. All you need is a brokerage account. Mutual fund shares are typically bought and redeemed through the fund company itself, at the net asset value of the day when the order was placed, usually calculated at 4 p.m. With ETFs, you can place a trade at the current market price throughout the day.

With ETFs, you buy shares, just like stocks of individual companies, but there is no minimum amount needed to invest, like there is with some mutual funds.10 As long as you can afford the cost of the share, you can purchase it.

Bottom Line: With iShares ETFs, you have a variety of choices to help you meet your needs, transparency to give you insight into your exposures and a way to invest that is convenient for you. But there is a larger story here as well. The legendary investor mentioned earlier gifted the winnings from his bet to Girls Inc. of Omaha. Consider iShares ETFs to help you reach your financial goals as well as fuel your personal passions.

More and more, consumers are changing the world through their buying decisions. According to Nielsen, 73% of consumers say they would change their consumption habits to reduce their impact on the environment.11

But did you know you can seek to make an impact as an investor, too? Sustainable investing, also commonly referred to as socially responsible investing, is an investment strategy for those who seek sustainable outcomes while pursuing their financial goals, and it’s making fast progress. ETFs are among the fastest-growing types of investment vehicles to access sustainable investment strategies.

BlackRock projects that global sustainable ETF assets will grow from $25 billion today to more than $400 billion by 2028.12 iShares provides investors with a range of options—outlined on the next page—for aligning their sustainability goals with their financial objectives.

GO BROAD WITH ESG INVESTING

ESG investing evaluates companies on their environmental (E), social (S) and governance (G) business practices.

Environmental (“E”) criteria can include a company’s carbon and toxic emissions, impact on biodiversity and resource consumption. Social (“S”) criteria examine companies’ impact on communities, employee treatment and product quality. Governance (“G”) criteria can include board composition, executive pay and risk controls for things like corruption, bribery and accounting malpractice.

As an example, iShares ESG MSCI USA ETF (ESGU) provides access to higher ESG-rated companies while seeking similar risk and return to the relevant broad market. ESGU is one of seven iShares Sustainable Core funds, which allow investors to build a low-cost sustainable portfolio across stocks and bonds.

GET SPECIFIC WITH THEMATIC AND IMPACT INVESTING

Thematic investing focuses on a particular E, S or G issue, like clean energy. iShares Global Clean Energy ETF (ICLN) provides exposure to companies from around the world that produce energy from solar, wind and other renewable sources.

Impact investing seeks to achieve a specific, measurable and sustainable outcome, like environmental impact. iShares Global Green Bond ETF holds bonds that are issued to fund environmental projects.

Bottom Line: With sustainable ETFs, you can seek to make an impact while pursuing your financial goals. To get started, think about the issues you’re most interested in and your investment objectives. Visit ishares.com to learn more.

IMPORTANT INFORMATION ABOUT iSHARES ETFs

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.

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 are heightened for investments in emerging/ developing markets and in concentrations of single countries.

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.

Diversification and asset allocation may not protect against market risk or loss of principal. Buying and selling shares of ETFs will result in brokerage commissions.

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 than the general securities market.

When comparing stocks or bonds and iShares Funds, it should be remembered that management fees associated with fund investments, like iShares Funds, are not borne by investors in individual stocks or bonds.

Investment comparisons are for illustrative purposes only. To better understand the similarities and differences between investments, including investment objectives, risks, fees and expenses, it is important to read the products’ prospectuses. ETFs combine features of both mutual funds (they hold a basket of securities) and stocks (they trade on exchanges intraday at market price, which may be greater or less than net asset value). However, there are several key differences between active mutual funds and exchange traded funds. First, shares of ETFs are not individually redeemed from the fund, which insulates investors from other shareholder activities. Mutual funds are accessed directly from the fund company or through a select broker that has an arrangement with the fund company to sell their funds. Pricing generally occurs once a day and investors buy or redeem shares of the mutual fund at the end-of-day net asset value, less any applicable fees. In addition, most ETFs seek to track a market index, before fees and expenses. The structure of active and index mutual funds is the same, but the management strategy differs in that active mutual funds seek to outperform their benchmark while the goal of index mutual funds is to track their index. Finally, transactions in shares of ETFs will result in brokerage commissions and will generate tax consequences. Some mutual funds may charge sales loads or redemption fees. Both mutual funds and ETFs are obliged to distribute portfolio gains to shareholders. Certain traditional mutual funds can be tax efficient as well.

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.

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 MSCI Inc., nor does this company make any representation regarding the advisability of investing in the Funds. BlackRock is not affiliated with MSCI Inc.

iSHARES and BLACKROCK are registered trademarks of BlackRock. All other marks are the property of their respective owners.

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