Benefits of iShares

iShares ETFs are managed funds listed or quoted on exchanges (including ASX) providing you with the opportunity to gain exposure to a diversified portfolio of assets in a single transaction.

The significant benefits of investing in the Funds include:

• low cost access to diversified portfolios of Australian shares;

• access to market capitalisation weighted, high dividend, minimum volatility and multiple-factor exposures; and

• benchmarked to institutional-quality indices provided by leading index providers.

Other benefits of investing in iShares ETFs generally include:

• Diversification: In contrast to a direct investment in a single company or bond, an iShares ETF provides, as far as possible and practicable, exposure to all of the securities or instruments within the index that the particular iShares ETF seeks to track.

• Access global markets: iShares ETFs let you achieve international diversification by investing in overseas equity and bond markets. With iShares ETFs you can gain exposure by asset class, market capitalisation, country and sector.

• Liquidity and transparency: Each iShares ETF seeks investment results that correspond generally to the performance (before fees and expenses) of a particular index. As a traded security, an iShares ETF enables you to enter and exit your holding on the ASX. You can easily track performance and trade during ASX trading hours (subject to ASX rules).

• Managing risk: Investing in an iShares ETF can assist you in establishing a portfolio appropriate to your investment needs and risk profile.

• Lower cost: As each iShares ETF is passively managed and designed to track the performance of a particular index, the expenses of managing an iShares ETF are generally lower compared to other forms of retail managed funds. However, brokerage or adviser fees may still apply when buying or selling units of an iShares ETF.

• Receipt of income: You will generally receive income from your investment in the form of distributions. Distributions may include dividends, coupons and other income. There may be years in which no distributions are made.

• Accessibility: iShares ETFs can offer a cost-effective way to gain exposure to a diversified portfolio of securities. They can be less costly than purchasing a large number of individual securities as there are less trading costs and they offer lower thresholds than an investor might otherwise be able to afford.

About the Fund

The fund aims to provide investors with the performance of an index, before fees and expenses, composed of small capitalisation Australian securities listed on the ASX. 

The index, the S&P/ASX Small Ordinaries Accumulation Index, is comprised of companies included in the S&P/ASX 300 index, but not in the S&P/ASX 100 index, and accounts for approximately 7% of the market capitalisation of ASX listed equities.

Why ISO?

1. Exposure to 200 small cap Australian stocks in a single fund 
2. Access to an institutional benchmark of small cap Australian equities 
3. Use to diversify your portfolio and customise your domestic stock allocation

How we invest your money

The Fund seeks to achieve its objective by tracking the performance of the S&P/ASX Small Ordinaries Total Return Index (referred to as the Index).

We will generally implement a full replication investment strategy to track the performance of the Index as risk relative to the Index is minimised. Our full-replication approach normally aims to purchase every security in the Index, while considering transaction costs.

However, where full replication is not possible, due to liquidity and transaction cost considerations, an optimisation investment strategy may be used.

Optimisation is an indexing strategy that involves investing in a representative sample of securities that collectively has an investment profile similar to the Index. The securities selected are expected to have, in the aggregate, investment characteristics (based on factors such as market capitalisation and industry weightings), fundamental characteristics (such as return variability and yield) and liquidity measures, similar to those of the Index. Therefore, the Fund may or may not hold all of the securities in the Index and the weighting of the securities held by the Fund may differ to the weighting of securities in the Index.

What does the Fund invest in?

The Fund generally invests in the Australian equity securities that form the Index.

The Fund may have limited exposure to securities that are not constituents of the Index, including derivatives, where such securities provide similar performance (with matching risk profile) to Index securities. However, from time to time the Fund may be exposed to all constituents of the Index.

Generally, the Fund may also hold a small allocation of cash (or cash equivalents, that may include other BlackRock Group funds) for cash flow management purposes.

About the Index

The Index is used as an institutional benchmark for small capitalisation Australian equity portfolios. The Index is comprised of companies included in the S&P/ASX 300 Index, but not in the S&P/ASX 100 Index.

The S&P/ASX Index series is calculated using a base-weighted aggregate methodology. This means that the level of an index reflects the total market value of all the component stocks relative to a particular base period.

For more information please see Section 8 of the PDS