Q: What are iShares®?
iShares are a family of Exchange Traded Funds (ETFs). iShares are
essentially index mutual funds that trade like a stock. iShares offer
you the diversification and low costs of index funds plus the flexibility,
convenience and liquidity of stocks.
Q: What company stands behind iShares?
Barclays Global Investors (BGI), a wholly-owned
subsidiary of Barclays Bank PLC, is the company behind iShares.
BGI is one of the world's largest asset managers and created
the world’s first index strategy over thirty years ago.
It launched iShares in
2000.
Q: What is the relationship between BGI and ChartwellETF.com?
ChartwellETF.com is sponsored by Chartwell Partners
which is a private firm completely independent of iShares
and Barclays Global Investors.
Q: How can ChartwellETF.com help me with my investments?
ChartwellETF.com will give you
an extra edge by offering you an independent and global perspective,
a variety of practical strategies and model portfolios.
This should help you and your advisors put together a portfolio
that meets your goals, time horizon and risk profile.
Q: How do I buy ETFs?
It is easy to buy and sell ETFs through
any brokerage account including online “discount” brokers. ETFs trade
on the American Stock Exchange, the Chicago Board Options Exchange,
and the New York Stock Exchange. Keep in mind that ETFs are
not shares of a company but rather ETFs are
shares of a portfolio or “basket” of companies that
closely tracks a variety of market indices.
Q: How do the management fees of iShares compare with
actively managed mutual funds?
The annual management fees of ETFs are significantly
lower than actively managed mutual funds and normally lower
than mutual index funds. This cost advantage is only marginally
diminished by the need to pay brokerage commissions on ETF transactions,
especially if you use a “discount” broker.
Q: Are there any potential tax advantages to using ETFs?
Yes, ETFs give you more
control and, compared to traditional mutual funds, can potentially
lower your annual capital gains distributions. As an index fund, ETFs will
normally buy and sell securities less often than actively managed
mutual funds. In addition, mutual fund shareholder decisions
to purchase or redeem shares from the fund may lead to capital
gains distributions to all shareholders, no matter how you may
have been in the fund.
Q: Can I reinvest dividends earned by my ETFs?
Yes. If your broker-dealer (brokerage firm)
offers you a dividend reinvestment program (DRIP) as many
do, iShares can be part of that program.
Q: Are there any fixed income ETFs
Yes, there are currently six fixed income ETFs available
to you. These offer you many of the same advantages relative
to actively managed bond funds. Fixed income iShares track
fixed income indexes such as the Lehman 1-3 Year Treasury Bond
Index.
Q: When do fixed income ETFs mature and when
are dividends distributed?
The fixed income ETF funds themselves
never mature. Instead the funds will sell securities before
they mature and re-invest the proceeds. Consistent with bond
mutual funds, fixed income ETFs distribute
dividends monthly.
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