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iShares ETF and iShares Trusts from Barclays

A Sector Investing Perspective

The iShares family includes several sector and industry-group specific iShares exchange-traded funds (ETFs) as well as commodity-oriented iShares trusts. The sector and industry-group specific iShares ETFs are registered as iShares, Inc. under the 1940 Investment Company Act. The commodity-oriented iShares Trusts are investment vehicles designed to track the price movements of certain commodities. The iShares Trusts are neither an investment company registered under the 1940 Investment Company Act nor a commodity pool as defined by the Commodity Exchange Act.

Breadth of Sector iShares

The iShares family includes 40 sector and industry-group iShares ETFs. Three commodity-oriented iShares Trusts are also offered.

Investment Approach

iShares ETFs take an index or ‘passive’ approach to investing. All of the sector and industry-group iShares seek to track the returns of their target index less any fees and expenses. Of the 40 sector and industry-group iShares, 22 track Dow Jones indexes and 11 track S&P Global indexes.

The objective of the commodity-related iShares is to track price movements of the underlying commodity. The iShares COMEX Gold Trust seeks to track the price of gold. The settlement price for the spot month gold contract on the COMEX is used as the basis. The iShares Silver Trust seeks to track the price of silver as determined by the London Fix. The iShares S&P GSCI Commodity-Indexed Trust seeks to match the performance of the S&P GSCI Total Return Index, a world-production weighted benchmark of commodity prices.

Expense Ratio

Most sector and industry-group iShares have an expense ratio of 0.48%. The iShares COMEX Gold Trust has a 0.40% expense ratio whereas the iShares Silver Trust has a 0.50% expense ratio. The iShares S&P GSCI Commodity-Indexed Trust carries a 0.75% expense ratio.

Trading Size

iShares ETFs and Trusts may be purchased in ’round lots’ of 100 shares or smaller with the minimum number being one share.

AlphaProfit Take

Backed by one of United Kingdom’s largest financial services groups Barclays Bank PLC, iShares are a force in the world of ETFs.

Relatively wide selections of sector and industry-group ETFs are available as iShares. Coming in two flavors, iShares ETFs that track Dow Jones indexes consist of U. S. companies while iShares ETFs that track S&P Global indexes include companies domiciled abroad as well. Investors looking for global sector exposure as well as industry-group exposure will want to take a closer look at iShares offerings. The liquidity of sector and industry-specific iShares varies case-by-case. As such, bid-ask spread for certain iShares may be somewhat wide.

The iShares COMEX Gold Trust and iShares Silver Trust are convenient investment vehicles that allow investors to profit from moves in the price of gold and silver bullion without venturing into the spot or futures markets. iShares S&P GSCI Commodity-Indexed Trust offers a play on commodities in general with prices in the energy complex being the key underlying driver. The iShares Trusts are however not a substitute for owning commodities.

AlphaProfit Newsletter and iShares ETF Recommendations

AlphaProfit Sector Investors’ Newsletter is the premier resource for sector investors. The Newsletter offers iShares exchange traded fund recommendations. The Newsletter and its model portfolios have frequently been ranked #1 by Hulbert Financial Digest.

About AlphaProfit MoneyMatters

AlphaProfit MoneyMatters is a free e-letter distributed to registered users of AlphaProfit’s website. The e-letter analyzes the economy, markets, and sectors and provides money-making insights on stocks, exchange-traded funds, and mutual funds. AlphaProfit MoneyMatters is edited by Dr. Sam Subramanian acclaimed for his financial acumen and analytical skills. Sign Up for ETF Newsletter.


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