ETF Portfolio Solutions: A Multi-Asset Approach Andrew Keegan, Portfolio Strategist, BlackRock For professional clients only - EMEAiS-1635
Why have ETF Solutions become increasingly relevant? 1. Focus on Asset Allocation Focus has been directed at how to use ETFs within existing portfolios as well strategic asset allocation using ETFs. This is a result of: regulatory changes, greater focus on costs and market volatility. Risk Management 2. Regulatory Change MiFID II, UK RDR and the Dutch equivalent are all regulatory frameworks aimed at protecting the end investor. They have each been catalysts for increased interest in asset allocation services and capabilities among platforms and advisory networks. Asset Allocation 3. Product Range ishares has the largest ETF range in Europe covering major markets and multiple asset classes. As well as continuing to develop innovative new products, our focus is to provide technical expertise to aid in using ETFs effectively and efficiently Client Outcomes 4. BlackRock Offering With an investment culture and philosophy rooted in empirical and analytical rigor, BlackRock has a unique ability to look and provide solutions across asset classes, geographies and investment strategies. Source: BlackRock, ETP Landscape, as of 28 November 2014. 2
Why are ETFs well positioned for this trend? Accessibility, Efficiency, Simplicity, Affordability Easy to implement well-diversified solutions across a wide range of assets Transparent for customers Asset allocation focus and not necessarily beating a benchmark Typically low costs and management fees Continuously accessible and tradable Low cost ETFs can be more cost-efficient than conventional mutual funds Transparency ETFs offer high transparency with regard to fund composition, performance and cost Diversification ETFs offer diversification and avoid a concentration on individual stocks/ bonds Flexibility Wide range of ETFs available. Buy and Sell orders can be executed simply and quickly. 3
Is it about Active versus Passive. or Fundamental versus Systematic? source: http://en.chessbase.com/post/first-female-advanced-che-match-drawn-050413 4
The Alpha-Beta Continuum with ETFs β α ishares Exchange Traded Funds Portfolios Solutions Managed Index Portfolios BlackRock BlackRock fonds funds BlackRock Special BlackRock Solutions funds Building blocks Core market cap Smart beta, hedged Strategy Market insights Product analysis Model Portfolios Strategic, tactical and target income models Quantitative approach Portfolio Analysis & Solutions Portfolio and risk analysis, case studies Bespoke approach Active multi-asset funds Quantitative approach with tactical positioning Utilising both ishares ETFs and index funds 3 risk categories: SRRI Defensive, Moderate and Growth. EUR, GBP, CHF & USD Equity funds Fixed Income funds Absolute return Funds Dividend strategies Multi-Asset Strategies Alternative strategies Alpha-strategies Beta-strategies Multi-Asset Strategies BlackRock s Proprietary Aladdin Risk system BlackRock Risk Management Source: BlackRock. 5
Why Multi-Asset? Asset Class Returns in USD (2004 2014) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Property 38% Emerging Market Equities 35% Property 42% Emerging Market Equities 33% Global Government Bonds 9% Emerging Market Equities 62% Property 20% Global Government Bonds 5% Property 29% US Equity 32% Property 16% Emerging Market Equities 16% Global Equity 16% Emerging Market Equities 28% Commodities 16% Cash 3% Global High Yield Bonds 58% Commodities 17% Grade Bonds 5% Global High Yield Bonds 19% Global Equity 29% US Equity 14% Global High Yield Bonds 12% Property 15% Commodities 24% Cash 6% Grade Bonds -5% Property 38% Global High Yield Bonds 15% Global High Yield Bonds 4% Emerging Market Equities 17% Global High Yield Bonds 6% Global Equity 10% Global Equity 11% Global High Yield Bonds 6% US Equity 16% US Equity 5% Global High Yield Bonds -25% US Equity 26% US Equity 15% US Equity 2% US Equity 16% Property 4% Global Government Bonds 8% US Equity 11% US Equity 5% Global Equity 16% Global Government Bonds 5% Commodities -36% Global Equity 26% Emerging Market Equities 14% Cash 0% Global Equity 16% Emerging Market Equities 3% Grade Bonds 8% Commodities 9% Global Government Bonds 4% Global High Yield Bonds 12% Global Equity 5% US Equity -37% Commodities 19% Global Equity 10% Global Equity -5% Grade Bonds 11% Cash 0% Emerging Market Equities 5% Grade Bonds 5% Grade Bonds 4% Cash 5% Grade Bonds 3% Global Equity -39% Grade Bonds 17% Grade Bonds 7% Property -6% Global Government Bonds 7% Grade Bonds 0% Global High Yield Bonds 3% Global Government Bonds 4% Cash 3% Grade Bonds 4% Global High Yield Bonds 2% Emerging Market Equities -46% Global Government Bonds 3% Global Government Bonds 5% Emerging Market Equities -13% Cash 0% Global Government Bonds -1% Cash 0% Cash 1% Commodities 0% Global Government Bonds 2% Property -7% Property -48% Cash 1% Cash 0% Commodities -13% Commodities -1% Commodities -10% Commodities -17% Source: BlackRock/Thomson Reuters Datastream. MSCI World Local Currency Total Return Index (Global Equity), S&P 500 $ Total Return Index (US Equity), MSCI Emerging Markets Local Currency Total Return Index (Emerging Market Equity), BarCap Global Sovereign Bond Total Return Hedged to USD Index (Global Sovereign Bonds), BarCap Global Corporate Bonds TR Hedged to USD Index (Global Grade Bonds), BarCap Global High Yield TR Hedged to USD Index (Global High Yield Bonds), FTSE EPRA/NAREIT Total Return Index (Property), Dow Jones UBS Commodity Total Return Index (Commodity), US 3M $ LIBOR TR Index (Cash). 2014 Performance to 31/12/2014. 6
What is an optimal portfolio anyway? Strategy Full Optimization Risk Parity Volatility Throttling Naïve 1/N strategies Requirements I can estimate expected returns. So I am going to do a full optimization. I ve read up on modern portfolio theory and while I don t believe in the efficient market hypothesis, I get the free lunch that diversification and (lack of) correlation offers. OK, I know that equities are more risky than bonds (in general) so let s allocate more to less volatile assets and less to more volatile assets. None. I know nothing about the world so I am just going to diversify. 1. Sensible, well engineered portfolios. 2. Good understanding of preferences, where we have views. 3. Don t get too hung up on technically optimal portfolios. 7
Our Philosophy We believe that superior investment outcomes are best achieved through a disciplined, objective investment process Our investment process systematically captures return premiums while managing risks and implementation costs through optimization-based portfolio construction Return: Fundamentally-anchored, systematic approach using top-down and bottom-up based insights Risk: Proprietary portfolio & risk management systems designed to produce diversified portfolios that only take compensated risks Return Total Performance Management Risk Cost: Trading costs integrated into portfolio construction using proprietary transaction cost models Cost The team has decades of cumulative experience developing and managing investment strategies using this scientific approach Source: BlackRock. 8
Long-Run Risk Premium Research Average Short Rate ( ASR ) Underpins calculation of risk premiums (is the benchmark zero-risk investment strategy). Proprietary computation of 10-year risk free rate, based on modelling the trajectory of cash rates over the next 10-years, for the relevant yield curve based on the base portfolio currency Equity Risk Premium Long-run forecast expected returns less ASR. Based on fundamental economic drivers. Credit Risk Premium Default adjusted yields less ASR. Default adjustment looks through to underlying bonds. Default probability & recovery rate both taken into account. Bond Risk Premium Nominal sovereign yields (based on the yield curves at the duration point relevant to the rate exposure of the bond we are trying to price) less ASR. ASR incorporates longer-run growth & inflation views. Equity: Regional, Sector and Styles Fixed Income: Government, Grade, High Yield and Emerging Market Debt Source: BlackRock. 9
How does BlackRock define Smart Beta? Smart Beta offers some of the return advantages of active strategies, while retaining many of the benefits of passive strategies What is Smart Beta? Portfolio construction is rules-based, transparent and generally not cap-weighted Seeks to enhance risk-adjusted returns through exposure to persistent, desirable risk premia or market anomalies BlackRock Smart Beta may include equity, fixed income or multi-asset strategies What can Smart Beta do for a portfolio? A powerful tool to potentially improve investment outcomes: Addresses the known weaknesses of traditional benchmarks Captures many of the themes present in active portfolios for a fraction of the cost Provides a factor-based view of the world to understand portfolios and solve investor problems in creative ways β Passive Funds Smart Beta strategies reside in a continuum between active and passive Smart Beta Active Funds α Allocations different to market (cap) weight Capacity Fees and trading costs Low High 10
Helping You Navigate Risk We believe risk management is not about avoiding risk. It s about understanding more deeply the risks involved when making investment choices. $17 Trillion Dollars analyzed by our proprietary risk management software, Aladdin Leading banks, insurance companies, and sovereign nations rely on our risk-management expertise and proprietary risk management technology to examine and understand the risk in their portfolios. 30,000 Portfolios examined by Aladdin every minute 5,000 Portfolio stress tests run every week BlackRock Solutions: Aladdin System 3,000 Active risk factors monitored daily Portfolio & Risk Analysis Risk Management, Control & Oversight accounting Hedge management Risk and position reporting Centralized source of data Source: BlackRock. 31/08/2015 11
Growth Requirement Life Style Solutions for Growth, Savings and Income Growth Assets Focus on Savings Stability and liquidity Needs Focus on Income Needs, Capital Preservation and Drawdown Focus on Capital Growth Working Life Retirement 30 + Years Income Requirement 60+ Years 12
Strategic Asset Allocation Implementation Strategic Allocation Risk Profile Alts Equity Fixed Income Strategic allocation depending on appetite to risk, capacity for loss and time horizon For illustrative purposes only. Not indicative of any current model allocation. 13
Strategic Growth Models GBP Portfolio Allocations as of August 2015 Conservative Moderate Aggressive Standard Deviation 2 5.4% 9.1% 11.8% Weighted Average Expense Ratio 0.25% 0.32% 0.35% Fixed Income 73% 40% 15% IGLS ishares UK Gilts 0-5yr UCITS ETF 11% - 10% IGLT ishares Core UK Gilts UCITS ETF 16% 8% - INXG ishares Index-Linked Gilts UCITS ETF 5% - - ERNS ishares Ultrashort Bond UCITS ETF 8% - - SLXX ishares Core Corporate Bond UCITS ETF 20% 18% - GHYS ishares Global High Yield Corp Bond GBP Hedged UCITS ETF 8% 6% - SEMB ishares J.P. Morgan $ Emerging Markets Bond UCITS ETF 5% 8% 5% Developed Equity 21% 44% 56% CUKX ishares Core FTSE 100 UCITS ETF 5% 8% 11% IEUX ishares MSCI Europe ex-uk UCITS ETF 6% 9% 15% CSPX ishares Core S&P 500 UCITS ETF 3% - - IGUS ishares S&P 500 GBP Hedged UCITS ETF - 15% 10% SJPA ishares Core MSCI Japan IMI UCITS ETF 3% 5% - IJPH ishares MSCI Japan GBP Hedged UCITS ETF - - 10% CPJ1 ishares Core MSCI Pacific ex Japan UCITS ETF 4% 7% 10% Emerging Equity - 6% 14% EMIM ishares Core MSCI Emerging Markets IMI UCITS ETF - 6% 14% Non-Traditional 6% 10% 15% IWDP ishares Developed Markets Property Yield UCITS ETF 3% 7% 10% SGLN ishares Physical Gold ETC 3% 3% 5% 14
Tactical Growth Model GBP Portfolio Allocations as of August 2015 Fixed Income 39.6% Developed Equity 45.0% Emerging Equity 6.0% Non Traditional 9.40% Standard Deviation 2 7.46% Weighted Average Expense Ratio 0.34% Ticker Allocations Current IGLT ishares Core UK Gilts UCITS ETF 3.9% SLXX ishares Core Corporate Bond UCITS ETF 17.9% SLXH ishares Corporate Bond Interest Rate Hedged UCITS ETF - GHYS ishares Global High Yield Corp Bond GBP Hedged UCITS ETF 6.8% SEMB ishares J.P. Morgan $ Emerging Markets Bond UCITS ETF 11.0% CUKX ishares Core FTSE 100 UCITS ETF 10.5% IEUX ishares MSCI Europe ex-uk UCITS ETF 11.3% IGUS ishares S&P 500 GBP Hedged UCITS ETF 14.1% IJPH ishares MSCI Japan GBP Hedged UCITS ETF 5.0% CPJ1 ishares Core MSCI Pacific ex Japan UCITS ETF 4.1% EMIM ishares Core MSCI Emerging Markets IMI UCITS ETF 6.0% UKRE ishares MSCI Target UK Real Estate UCITS ETF 7.0% IWDP ishares Developed Markets Property Yield UCITS ETF 2.4% SGLN ishares Physical Gold ETC - 15
Income & Growth Asset Allocation Implementation Strategic Allocation Income Profile Alts Equity Fixed Income Income allocation depending on income requirement, appetite to risk, capacity for loss and time horizon *For illustrative purposes only. Not indicative of any current model allocation. 16
Income & Growth Asset Allocation Current GBP Asset Allocation Core Income Moderate Income High Income Aggressive Income Multi-Asset Income Current Yield Objective After Expenses 1 2.0% + 0.25% 3.0% + 0.25% 3.5% + 0.25% 4.0% + 0.25% 3.5% + 0.25% Standard Deviation 2 1.68% 3.02% 3.82% 4.63% 5.10% Weighted Average Expense Ratio 0.24% 0.28% 0.31% 0.37% 0.34% Duration 3 2.47 3.40 3.72 3.73 2.61 Government Bonds 31.7% 2.4% - - 10.0% Grade Credit 53.3% 72.6% 65.0% 42.0% 36.0% High Yield Credit 15.0% 20.0% 25.0% 35.0% 16.4% Emerging Markets Debt - 5.0% 10.0% 23.0% 6.4% Equities - - - - 31.2% Asset allocation strategies do not assure profit and do not protect against losses. Past performance does not guarantee future results. 17
Target Income Models GBP Portfolio Allocations as of August 2015 GOVERNMENT BONDS Core Income Moderate Income High Income Aggressive Income Multi-Asset Income IGLS ishares UK Gilts 0-5yr UCITS ETF 18.0% 2.4% - - 10.0% IGLT ishares UK Gilts UCITS ETF 13.7% - - - - INXG ishares Index-Linked Gilts UCITS ETF - - - - - INVESTMENT GRADE CREDIT ERNS ishares Ultrashort Bond UCITS ETF 18.0% 11.1% - - - SLXX ishares Core GBP Corporate Bond UCITS ETF - 10.8% 13.5% 8.9% - SLXH ishares Corporate Bond Interest Rate Hedged UCITS ETF 17.3% 14.7% 15.5% - - IS15 ishares Corporate Bond 1-5yr UCITS ETF 18.0% 18.0% 18.0% 15.1% 18.0% ISXF ishares Corporate Bond ex-financials UCITS ETF - 18.0% 18.0% 18.0% 18.0% HIGH YIELD SDHY ishares $ Short Duration High Yield Corporate Bond UCITS ETF - - 6.8% - - SHYU ishares $ High Yield Corporate Bond UCITS ETF 2.0% 3.6% 8.3% 17.0% 16.4% GHYS ishares Global High Yield Corp Bond GBP Hedged UCITS ETF 13.0% 16.4% 9.9% 18.0% - EMERGING MARKET BONDS SEMB ishares J.P. Morgan $ Emerging Markets Bond UCITS ETF - 5.0% 10.0% 18.0% 6.4% EMCP ishares USD Emerging Markets Corporate Bond UCITS ETF - - - 5.0% - DEVELOPED MARKET EQUITIES ISF ishares FTSE 100 UCITS ETF - - - - 15.2% IUKD ishares UK Dividend UCITS ETF - - - - 9.8% IAPD ishares Asia Pacific Dividend UCITS ETF - - - - 6.2% 18
Target Income GBP Risk Contribution as of August 2015 Total Standard Deviation by Risk Contribution Factor 4 These fixed income portfolios seek to meet their yield objectives with the least amount of risk (standard deviation) by diversifying across a wide variety of factors that can impact fixed income investments, such as interest rates, credit spreads and foreign exchange. This chart shows the contribution of individual risk factors to each portfolio's total risk, leveraging BlackRock s proprietary risk management system Aladdin. 7% 6.35% Total Standard Deviation (%) 2 6% 5% 4% 3% 2% 1% 0% 1.93% 3.15% 3.93% 4.53% 5.49% -1% Barclays Sterling Aggregate Bond Index Core Income Moderate Income High Income Aggressive Income Multi-Asset Income Rate Risk 6.40% 1.11% 1.46% 1.76% 1.83% 0.52% Credit Risk -0.05% 0.79% 1.56% 1.22% 1.40% 1.20% FX Risk - 0.03% 0.13% 0.95% 1.30% 0.41% Equity Risk - - - - - 3.36% Total Standard 2 6.35% 1.93% 3.15% 3.93% 4.53% 5.49 Past performance does not guarantee future results. Please see footnotes section at the end of the document for risk factor explanations. This information should not be relied upon as investment advice, research, or a recommendation by BlackRock regarding (i) the ishares Funds, (ii) the use or suitability of the model portfolios or (iii) any security in particular. Only an investor and their financial advisor know enough about their circumstances to make an investment decision. 19
Constructing Portfolios Using ishares Broadest Global Range of ETFs 700+ funds globally the most comprehensive range of choices for your portfolios ishares give you versatility to build the core of your portfolio, help meet specific goals, and implement your market views ishares can work with you to build and shape your portfolios using ETFs, from core exposures to targeted and outcome orientated exposures VERSATILITY TO HELP YOU BUILD PORTFOLIOS THAT PERFORM RATES REGIONAL COUNTRY EQUITY INCOME FACTORS SECTORS FIXED INCOME MINIMUM VOLATILITY CREDIT GOLD CORE BROAD EXPOSURE GOALS OUTCOME ORIENTED VIEWS TARGETED EXPOSURE Source: BlackRock, as of June 2015. 20
Footnotes 1) While each current yield objective was determined with reference to the current yields of the underlying funds, it is specific to each model and is not a prediction of fund or model yield or reflective of actual results. Realized yields will vary and may be lower. Model yields can be calculated by using a weighted average of the fund yields found in the table above. Past performance is not predictive of future results. 2) Standard deviation for the model portfolio is a statistical estimate measuring how dispersed returns are around an average. Standard deviation is estimated using the risk factor exposures and volatilities of the underlying funds, based on BlackRock Solutions multi-asset class risk models, and takes into account the correlations of these factors across the portfolio. Standard deviation is not meant to be a prediction of fund or model volatility and actual volatility of any portfolio based in whole or in part on the models shown will vary and may be higher. 3) Duration, represented by Option Adjusted Duration and a gauge of rate risk, measures the sensitivity of market price to parallel shifts in the yield curve. Positive duration means that as rates rise, the price decreases, and negative duration means that as rates fall, the price increases. 4) Contribution to risk is an additive measure of risk. The contribution to risk of a factor exposure of the fund is calculated as the change in the total portfolio risk that results from a small incremental increase to that factor exposure. This risk measure takes into account correlations across exposures and captures the risk of these as well as how diversifying they are in the total portfolio. Risk contributions are designed to sum to equal the total volatility of the portfolio. Past performance does not guarantee future results. Risk contribution factor exposures are: Total Risk contribution is the total standard deviation of the portfolio and is the sum of the risk contributions across rate, credit, FX and other risk.; Rate Risk contribution captures volatility associated with portfolio covariation with benchmark government interest rates.; Credit Risk contribution captures volatility associated with portfolio covariation with investment grade, high yield and distressed debt credit spreads over benchmark interest rates.; FX Risk contribution captures volatility associated with portfolio covariation with foreign exchange rate fluctuations.; Other Risk contribution captures the remaining portion of volatility that is idiosyncratic relative to Rate, Credit, Equity and FX Risk. Measures of risk contribution as defined by BlackRock Solutions. 21
Disclaimer Regulatory Information BlackRock Advisors (UK) Limited, which is authorised and regulated by the Financial Services Authority ('FSA'), having its registered office at 12 Throgmorton Avenue, London, EC2N 2DL, England, Tel +44 (0)20 7743 3000, has issued this document for access by qualified Investors only and no other person should rely upon the information contained within it. ishares plc, ishares II plc, ishares III plc, ishares IV plc and ishares V plc (together 'the Companies') are open-ended investment companies with variable capital having segregated liability between their funds organised under the laws of Ireland and authorised by the Financial Regulator. The German domiciled funds are "undertakings for collective investment in conformity with the directives" within the meaning of the German Law on the investments. These funds are managed by BlackRock Asset Management Deutschland AG which is authorised and regulated by the Bundesanstalt für Finanzdienstleistungsaufsicht. For investors in Switzerland This document is directed at 'qualified investors' only, as defined by Clause 10 (3) of the Swiss Act on Collective Schemes ('CISA') and Clause 6 of the Swiss Ordinance on Collective Schemes ('CISO'). Certain of the funds are not registered with the Swiss Financial Supervisory Authority FINMA which acts as supervisory authority in investment fund matters. In respect of these funds, the shares or units of these funds may not be offered or distributed in or from Switzerland unless they are placed without 'public solicitation' as such term is defined under the practice of the FINMA from time to time. With respect to those funds that are registered, the FINMA has authorised BlackRock Asset Management Schweiz AG, Bahnhofstrasse 39, 8001 Zurich, Switzerland, to act as Swiss Representative and JPMorgan Chase Bank, National Association, Columbus, Zurich branch, Dreikönigstrasse 21, 8002 Zurich, Switzerland, to act as Swiss Paying Agent of the Companies. The prospectus, KIID (Key Investor Information Document), the Articles of Incorporation, the latest and any previous annual and semi-annual reports of the Companies are available free of charge from the Swiss representative. Restricted Investors This document is not, and under no circumstances is to be construed as an advertisement or any other step in furtherance of a public offering of shares in the United States or Canada. This document is not aimed at persons who are resident in the United States, Canada or any province or territory thereof, where the companies/securities are not authorised or registered for distribution and where no prospectus has been filed with any securities commission or regulatory authority. The companies/securities may not be acquired or owned by, or acquired with the assets of, an ERISA Plan. Risk Warnings in the products mentioned in this document may not be suitable for all investors. Past performance is not a guide to future performance and should not be the sole factor of consideration when selecting a product. The price of the investments may go up or down and the investor may not get back the amount invested. Your income is not fixed and may fluctuate. The value of investments involving exposure to foreign currencies can be affected by exchange rate movements. We remind you that the levels and bases of, and reliefs from, taxation can change. BlackRock has not considered the suitability of this investment against your individual needs and risk tolerance. The data displayed provides summary information, investment should be made on the basis of the relevant Prospectus which is available from BlackRock Advisors (UK) Limited. In respect of the products mentioned this document is intended for information purposes only and does not constitute investment advice or an offer to sell or a solicitation of an offer to buy the securities described within. This document may not be distributed without authorisation from BlackRock Advisors (UK) Limited. Index Disclaimers "Barclays Capital Inc." and 'Barclays Euro Aggregate Bond Index', 'Barclays Euro Corporate 1-5 Year Bond Index', 'ishares Barclays Euro Corporate Bond Interest Rate Hedged', 'Barclays Germany Treasury Bond Index', 'Barclays Global Aggregate Bond Index' and 'Barclays Global Aggregate Corporate Bond Index' are trademarks of Barclays Bank PLC and have been licensed for use for certain purposes by BlackRock Fund Advisors or its affiliates. ishares is a registered trademark of BlackRock Fund Advisors or its affiliates.the Underlying Indices are maintained by Barclays Capital. Barclays Capital is not affiliated with the Funds, BFA, State Street, the Distributor or any of their respective affiliates. BFA has entered into a license agreement with the Index Provider to use the Underlying Indices. BFA, or its affiliates, sublicenses rights in the Underlying Indices to the Company at no charge. DAX is a registered trademark of Deutsche Börse AG. 'STOXX', 'EURO STOXX 50 ' are proprietary and copyrighted material and trade marks and/or service marks of STOXX Limited and have been licensed for use for certain purposes by BlackRock Advisors (UK) Limited and ishares II plc. ishares EURO STOXX 50 UCITS ETF (Inc) is not sponsored, endorsed, sold or promoted by STOXX, and STOXX makes no representation regarding the advisability of investing in such a fund.
Disclaimer 'STOXX', 'EURO STOXX Select Dividend 30' are proprietary and copyrighted material and trade marks and/or service marks of STOXX Limited and have been licensed for use for certain purposes by BlackRock Advisors (UK) Limited. ishares EURO Dividend UCITS ETF is not sponsored, endorsed, sold or promoted by STOXX, and STOXX makes no representation regarding the advisability of investing in such a fund. 'FTSE ' is a trade mark jointly owned by the London Stock Exchange plc and the Financial Times Limited (the 'FT') and is used by FTSE International Limited ('FTSE') under licence. The FTSE China 25 Index, FTSE 100 Index and FTSE UK Dividend + Index are calculated by or on behalf of FTSE International Limited ('FTSE'). None of the Exchange, the FT nor FTSE sponsors, endorses or promotes ishares China Large Cap UCITS ETF, ishares FTSE 100 UCITS ETF (Inc) and ishares UK Dividend UCITS ETF nor is in any way connected to the funds or accepts any liability in relation to their issue, operation and trading. All copyright and database rights within the index values and constituent list vest in FTSE. BlackRock Advisors (UK) Limited has obtained full licence from FTSE to use such copyright and database rights in the creation of these products. "J.P. Morgan" and "J.P. Morgan EMBISM Global Core Index" are trademarks of JPMorgan Chase & Co. licensed for use for certain purposes by BlackRock Institutional Trust Company, N.A. ("BTC"). ishares is a registered trademark of BTC.J.P. Morgan is the Index Provider for the Underlying Index. J.P. Morgan is not affiliated with the Fund, BFA, State Street, the Distributor or any of their respective affiliates. J.P. Morgan provides financial, economic and investment information to the financial community. J.P. Morgan calculates and maintains the J.P. Morgan EMBISM Global Core Index, J.P. Morgan Emerging Markets Bond Index Plus, J.P. Morgan Emerging Markets Bond Index Global and Emerging Markets Bond Index Global Diversified. Security additions and deletions into the emerging markets bond indexes do not in any way reflect an opinion in the investment merits of the security. Markit iboxx is a registered trade mark of Markit Indices Limited and has been licensed for use by BlackRock Advisors (UK) Limited. Markit Indices Limited does not approve, endorse or recommend BlackRock Advisors (UK) Limited or ishares plc. These products are not sponsored, endorsed or sold by Markit Indices Limited and Markit Indices Limited makes no representation regarding the suitability of investing in these products. The Fund is not sponsored, endorsed, sold or promoted by Morningstar. Morningstar makes no representation or warranty, express or implied, to the owners of shares of the Fund or any member of the public regarding the advisability of investing in securities generally or in the Fund particularly or the ability of the Morningstar Emerging Markets Corporate Bond Index (the Index ) to track general stock market performance. Morningstar s only relationship to the Company or to the BlackRock group is the licensing to the BlackRock group of certain trademarks and trade names of Morningstar and of the Index which is determined, composed and calculated by Morningstar without regard to the BlackRock group, the Company or the Fund. Morningstar has no obligation to take the needs of the BlackRock group or the owners of the shares of the Fund into consideration in determining, composing or calculating the Index. Morningstar is not responsible for and has not participated in the determination of the prices and amount of shares of the Fund, or the timing of the issuance or sale of such shares or in the determination or calculation of the equation by which shares of the Fund are to be converted into cash. Morningstar has no obligation or liability in connection with the administration, marketing or trading of shares of the Fund. Morningstar does not guarantee the accuracy or the completeness of the Index or any data included therein and Morningstar shall have no liability for any errors, omission, or interruptions therein. Morningstar makes no warranty, express or implied, as to results to be obtained by the BlackRock group, owners of shares of the Fund or any other person or entity from the use of the Index or any data included therein. Morningstar makes no express or implied warranties and expressly disclaims all warranties of merchantability or fitness for a particular purpose or use with respect to the Index or any data included therein. Without limiting any of the foregoing, in no event shall Morningstar have any liability for any special, punitive, direct, indirect or consequential damages (including lost profits) resulting from the use of the Index or any data included therein, even if notified of the possibility of such damages. ishares funds are not sponsored, endorsed, or promoted by MSCI, and MSCI bears no liability with respect to any such funds or any index on which such funds are based. The Prospectus contains a more detailed description of the limited relationship that MSCI has with BlackRock Advisors (UK) Limited and any related funds. Standard & Poor s ', 'S&P ', are registered trademarks and 'S&P 500 Minimum Volatility' is a trademark of Standard & Poor s Financial Services LLC and have been licensed for use for certain purposes by BlackRock Fund Advisors or its affiliates. ishares is a registered trademark of BlackRock Fund Advisors or its affiliates. ishares S&P 500 Minimum Volatility is not sponsored, endorsed, sold or promoted by S&P and S&P makes no representation regarding the advisability of investing in this product. 2015 BlackRock, Inc. All Rights reserved. BLACKROCK, BLACKROCK SOLUTIONS, ALADDIN, ishares, LIFEPATH, SO WHAT DO I DO WITH MY MONEY, INVESTING FOR A NEW WORLD, and BUILT FOR THESE TIMES are registered and unregistered trademarks of BlackRock, Inc. or its subsidiaries in the United States and elsewhere. All other trademarks are those of their respective owners. EMEAiS-0234