iShares

International



When it comes to a portfolio’s international allocation, not all exposures are alike. Industry breakdown, currency exposures and macroeconomic factors can all contribute to performance and risk. Deconstructing global portfolios offers investors the opportunity to customize exposures based on their specific needs and constraints.

Use the iShares suite of international ETFs to customize your portfolio using different strategies, including:

Broad Exposure

Investors looking for broad global exposure might start with the MSCI All Country World Index (MSCI ACWI). Widely used by investment professionals as the measure of global equity markets, the index aims to capture 85% of the world’s equity market capitalization and combines four well-recognized benchmark indexes: MSCI EAFE, MSCI Emerging Markets, MSCI Canada and MSCI USA (see below).

The iShares MSCI ACWI Index Fund (ACWI) gives investors diversified exposure in a single trade to international and domestic countries, developed and emerging markets, and large and mid cap stocks.

chart: MSCI ACWI Index Breakdown

Source: MSCI, as of 01/31/12. Index constituents are subject to change.

Regional Exposure

Many investors incorporate strategic allocations to developed and emerging markets, but those looking to further fine-tune exposure may consider tactically over- and underweighting regional exposures, as well. This can be accomplished in one of two ways:

  • Regional tilts. Investors can start with developed and emerging markets exposure using the iShares MSCI EAFE Index Fund (EFA) and the iShares MSCI Emerging Markets Index Fund (EEM), then tactically overweight regional ETFs based on research calls or personal views.
  • Unbundling. Investors can build developed and emerging markets exposure using regional funds, such as the iShares MSCI Emerging Markets Latin America Index Fund (EEML), the iShares MSCI Emerging Markets EMEA Index Fund (EEME) and the iShares MSCI Emerging Markets Asia Index Fund (EEMA).

Granular Exposure

Research shows that in global markets, country factors have had more impact on index performance than style and industry factors since the mid-2000s*. What this means for investors is that there’s opportunity to be found in managing single country exposures.

With numerous single country ETFs to choose from, iShares offers myriad options to investors looking to customize their exposure to global markets. Investors can use these ETFs to:

  • Execute tactical calls. Under- or overweight a specific country based on out- or underperformance.
  • Take macroeconomic views. Tilt country exposures to express an opinion on economic factors such as GDP growth and inflation.
  • Hedge exposure. Correct unintended country or sector exposure through strategic hedges.

*Source: MSCI Barra, as of 2/11

Related Funds

IEMG iShares Core MSCI Emerging Markets ETF
IEFA iShares Core MSCI EAFE ETF
IXUS iShares Core MSCI Total International Stock ETF
EEMV iShares MSCI Emerging Markets Minimum Volatility Index Fund
EFAV iShares MSCI EAFE Minimum Volatility Index Fund

Carefully consider the iShares Funds' investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the Funds' prospectuses, which may be obtained by calling 1-800-iShares (1-800-474-2737), or by viewing or downloading a prospectus. Read the prospectus carefully before investing.

Investing involves risk, including possible loss of principal. Asset allocation and diversification may not protect against market risk.

In addition to the normal risks associated with investing, international investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. Securities focusing on a single country, narrowly focused investments and investments in smaller companies typically exhibit higher volatility.

The strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer to buy any security. There is no guarantee that any strategies discussed will be effective.

Buying and selling shares of iShares Funds will result in brokerage commissions.

The iShares Funds ("Funds") are distributed by BlackRock Investments, LLC (together with its affiliates, "BlackRock").

The iShares Funds are not sponsored, endorsed, issued, sold or promoted by Cohen & Steers Capital Management, Inc., European Public Real Estate Association ("EPRA®"), FTSE International Limited ("FTSE"), JPMorgan Chase & Co., MSCI Inc., Markit Indices Limited, Morningstar, Inc., The NASDAQ OMX Group, Inc., National Association of Real Estate Investment Trusts ("NAREIT"), New York Stock Exchange, Inc., Russell Investment Group, S&P Dow Jones Indices LLC or Standard & Poor's, nor are they sponsored, endorsed or issued by Barclays Capital Inc. None of these companies make any representation regarding the advisability of investing in the Funds. BlackRock is not affiliated with the companies listed above.

Neither FTSE nor NAREIT makes any warranty regarding the FTSE NAREIT Real Estate 50/Residential/Retail/Mortgage or Industrial/Office Index; all rights vest in NAREIT. Neither FTSE nor NAREIT makes any warranty regarding the FTSE EPRA/NAREIT Developed Real Estate ex-US/North America/Europe/Asia Index; all rights vest in FTSE, NAREIT and EPRA. All rights in the FTSE Developed Small Cap ex-North America Index vest in FTSE. "FTSE®" is a trademark jointly owned by the London Stock Exchange Plc and The Financial Times Limited and is used by FTSE under license.

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