Picking the right ETF: What to know, what to avoid

Picking the right ETF: What to know, what to avoid

Daniel Prince, CFA Head of iShares Product Consulting

March 2019

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Agenda

Why use ETFs

How to use ETFs

Getting started with ETFs

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Why use ETFs

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ETFs offer the best of both worlds ETFs offer a low cost, diversified, tax efficient way to invest

STOCK

TRADABLE DURING THE DAY

ETFs

DIVERSIFIED FUNDS THAT TRADE LIKE STOCKS

MUTUAL FUND

DIVERSIFIED

Like a stock, an ETF can be bought and sold whenever the market is open

Like a mutual fund, an ETF is typically a collection of stocks

or bonds and professionally managed

Transactions in shares of ETFs will result in brokerage commissions and will generate tax consequences. All regulated investment companies are obliged to distribute portfolio gains to shareholders. For more information on the differences between traditional mutual funds and ETFs, see Appendix.

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Evolution and growth of the ETF industry

US ETF AUM has grown 10x

3500

since 2004 and 2x since 2012

3000

2500

The 10 year bull market starts to show signs of

slowing

US ETF AUM passes $3 trillion in 2016

Projected >$5tn1

USD Billions

2000

1500

1000

500 First ETF launches

First fixed income ETF

launches

First gold ETF launches

0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

2020 est.

Source: Morningstar as of 12/31/2018. US ETF flows from the following Morningstar categories: International Equity, US Equity, Sector Equity, Taxable Bond, Commodities, Alternative, Allocation, Municipal Bond. 1Source: PriceWaterhouseCoopers, ETF 2020: Preparing for a new horizon. Forecasted growth of global industry assets under management.

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