For professional clients and qualified investors only
Capital at risk
Think differently about income with active ETFs
As investor’s needs continue to evolve, we are committed to providing choice and enhancing access to innovative solutions to help them deliver the best portfolio outcomes. The launch of the iShares World Equity High Income and iShares US Equity High Income UCITS ETFs brings investors a powerful combination of BlackRock’s active management capabilities and the breadth and scale of the world’s largest ETF provider1.
1 Source: Morningstar 31 December 2023.
The iShares equity high income ETF range provides investors with differentiated income strategies that seek to generate a high-level of income with lower volatility than its reference benchmarks, delivered in the convenience, of an iShares ETF.
What makes the iShares equity high income range ETF different from traditional equity income strategies?
Most traditional equity income strategies rely primarily on bottom-up fundamental stock selection which typically leads to holding dividend paying and quality companies in the portfolio. Whilst this can help deliver income and growth over time, this can result in persistent style factor biases in the portfolio, such as higher value exposure and an underweight to growth. Our systematic active equity income strategy takes an innovative and differentiated approach.
One technique we have developed is our proprietary “dividend rotation model”, which aims to forecast dividend payments across the market and dynamically and efficiently allocate capital to companies offering the best yield opportunities. Combining dividend rotation with more than 50 additional investment insights that seek to forecast which companies are likely to outperform or underperform the market, results in an actively managed portfolio with reduced style and sector biases, meaning these funds can offer more diversified sources of income and growth than the typically available, positioning them well to play a role in the core of an investor’s portfolio.
How our technology, experience, and a strategic approach could transform your equity high income strategy.
We employ a rigorous research process and harness cutting edge tools and technology to develop investment models across a range of 800+ data signals, assessing fundamentals, sentiment, and macro characteristics of thousands of securities, at scale, and on a daily basis. We ask similar questions to any other investor such as company valuations, a company’s growth outlook, and the top-down macro environment, but our team answer these questions and build portfolios using new data and technology, allowing us to incorporate insights across a much broader universe of investments than any human could ever do.
In addition, the fund employs an index options overlay and hedging strategy that plays two key roles: 1. Generate additional source of income and 2. manage risk by allowing the funds to participate in the market upside while minimising the risk of underperforming the market.
The result, is a differentiated portfolio through a systematic active approach, incorporating sustainability characteristics, aiming to deliver high income, with lower risk than the market, all in a convenient and transparent ETF wrapper.
How could the iShares equity high income ETF range, benefit investors’ portfolios?
We see three key potential benefits to client portfolios, either as a broad global allocation or regional building bloc.
1) Firstly, as a complement to other high-yielding asset classes, for example credit or alternatives, that may have less liquidity or offer a differentiated risk profile.
2) Secondly, as a diversified source of growth and income, these ETFs can be used a broad building block within an equity portfolio, reducing style biases typically seen in income focused strategies.
3) And finally, lower volatility. With a target portfolio beta of 0.9, these ETFs aim to deliver a high level of income at lower risk without sacrificing total return, over the long term.
