iShares is a brand of exchange-traded funds (ETFs) that track different stock market indices or bonds, offering diversified trading options for investors. ETFs trade like stocks, but with multiple assets and variable prices throughout the day. iShares have lower fees, greater transparency, and are a good complement to mutual funds, money markets, bonds, and certificates of deposit for a diverse portfolio.
iShares is a brand of exchange-traded fund (ETF) that each tracks a different stock market index or bond. In essence, they are designed to emulate the performance of those two types of markets. They have been around since the 1990s and are currently owned by investment company BlackRock. iShares are intended to serve as diversified trading options for investors interested in tracking benchmarks, in opposition to or in addition to mutual funds and stocks in individual corporations.
ETFs are generally funds that trade like stocks, but contain multiple assets, like mutual funds. However, unlike mutual funds, which are bought and sold at a fixed price once a day, EFTs trade at variable prices throughout the day. In addition, it is possible to perform more advanced transactions, such as short sales, limit orders, and options, with them. iShares are just one type of ETF, other types include commodity ETFs, currency ETFs, and even more complex funds that are actively managed or leveraged to maximize profits in a buy or sell market.
iShares as a brand of ETF was started in the mid-1990s by Barclays, and was originally called World Equity Reference Shares (WEBS). However, they were not the first ETFs on the market. That distinction went to Standard & Poor’s Depository Receipts (SPDRS), which were introduced in 1993 and tracked the S&P 500 Index. iShares funds are listed on several stock exchanges around the world, including the New York Stock Exchange ( NYSE), NASDAQ and others. They can be traded just like any other stock, and they comprise a large proportion of the roughly 1,500 ETFs that exist on US stock exchanges alone.
Proponents of iShares say they have lower fees, less taxes, and present a more acceptable risk option than mutual funds or individual stock portfolios. Unlike mutual funds, iShares discloses the contents of its portfolios daily, rather than quarterly, offering a greater degree of transparency for investors. There are iShare funds designed to be equivalent to various categories of mutual funds, such as large-cap blends, small-cap blends, international blends, and emerging markets.
For the novice investor, iShares, and ETFs in general, should be considered a good complement to mutual funds, money markets, bonds, and certificates of deposit to form the backbone of a diverse portfolio. While it’s unlikely to skyrocket in value, it’s also rare for its value to crash. As with any smart investment strategy, the goal should be consistent growth over time from a variety of funding sources.
Smart Asset.
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