A sound investment process and strong management team underpin iShares MSCI Intl Small-Cap Mltfct ETF's Morningstar Medalist Rating of Gold. The portfolio maintains a cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy's sensible investment philosophy merits a High Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an underweight position in liquidity exposure and an overweight in volatility exposure compared with category peers. Low liquidity risk exposure is attributed to stocks with a low trading volume, limiting managers' flexibility. And high volatility exposure is rooted in stocks that have a higher standard deviation of returns. The strategy’s management team earns an Above Average People Pillar rating. The strategy's parent organization earns the firm an Above Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

Saratoga Invest 6.75 % Notes 2016-30.12.23

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Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. iShares MSCI Intl Small-Cap Mltfct ETF earns a High Process Pillar rating. 

The predominant contributor to the rating is that this fund tracks an index. Historical data, such as Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. Strong risk-adjusted performance also contributes to the process. This can be seen in the fund's five-year alpha calculated relative to the category index, which suggests that the managers have shown skill in their allocation of risk. The firm's five-year retention rate of 92% supports the process as well.

 This strategy skews toward smaller, more value-oriented companies than its average peer in the Foreign Small/Mid Blend Morningstar Category. Looking at additional factor exposure, this strategy continually held some stocks with low trading volume over the last few years. Less-liquid stocks might offer strong returns to compensate for their risks, but they can be harder and more expensive to trade in bear markets. In the latest month, the strategy was also less exposed to the Liquidity factor compared with Morningstar Category peers. This strategy has also exhibited a tilt toward high-volatility stocks over these years, meaning it has invested in companies that have a higher historical standard deviation of returns. Such exposure tends to pay off when markets are hot and to be costly when they are not. Compared with category peers, the strategy also had more exposure to the Volatility factor in the most recent month. In addition, this strategy's holdings have included more companies with high dividend or buyback yields than peers over these years. Stocks with high yields can be more stable, mature companies, but at times extreme market pressure or fundamental deterioration may prompt them to cut their dividends, which tends to hurt stock performance. In this month, the strategy also had more exposure to the Yield factor over its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section. 

 The portfolio has allocations in its top two sectors, financial services and technology, that are similar to the category. The sectors with low exposure compared to category peers are healthcare and industrials; however, the allocations are similar to the category. The portfolio is composed of 984 holdings and its assets are more dispersed than the typical peer in the category. In the most recent disclosure, 5.8% of the portfolio's assets were concentrated in the top 10 fund holdings, compared to the category average's 12.8%. And in closing, in terms of portfolio turnover, looking at year-over-year movements, 4% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

High

Process

iShares’s team is strong compared with others in the industry, resulting in an Above Average People Pillar rating. There are three managers listed on the fund: Paul Whitehead, Jennifer Hsui, Greg Savage. Experience on the team is abundant, with 18 years of average portfolio management experience. Together, they manage a total of 257 strategies, with a Silver asset-weighted average Morningstar Medalist Rating, demonstrating their potential to deliver positive alpha relative to the category median in aggregate.  

 Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

Above Average

People

BlackRock offers compelling options across asset classes and vehicles. It earns an Above Average rating for Parent. 
The firm’s approximately USD 8 trillion in assets under management, as of Sept. 30, 2022, gives it unparalleled scale and influence. It is a market-leading index fund provider globally, and its iShares exchange-traded fund franchise offers a low-cost lineup of core funds that investors can use to build a well-diversified portfolio for dirt cheap. The firm can be more adventurous in its ETF launches than some peers, so not everything it launches is appropriate for the masses. As a result, it is likely to have more ETF closures than peers that stick to the basic building blocks.  
The firm’s active fixed-income and multi-asset efforts also stand out as some of the best in the industry. Those benefit from BlackRock’s commitment to building a first-class risk management system via its Aladdin analytics software. The software is also available for sale to other firms and has proved to be a popular option for competitors, a testament to its usefulness. 
More recently, the firm has shifted its focus to ESG offerings and incorporating ESG across its investment lineup, leading to a political backlash in the United States.
BlackRock isn’t the best at everything it tries to do, but retail investors, financial advisors, and large institutions could all build robust portfolios using BlackRock’s products.

Parent

iShares MSCI International Small-Cap Multifactor ETF

ISCF tracks an index of international small-cap firms. Stocks are selected and weighted to increase exposure to four investment factors (quality, value, momentum, and small size) while maintaining market-like characteristics.

ISCF tracks an index of international small-cap firms in developed markets outside the US. Stocks are selected and weighted to increase exposure to four investment factors (quality, value, momentum, and low volatility).

Making its debut on 04/28/2015, smart beta exchange traded fund iShares International Small-Cap Equity Factor ETF (ISCF) provides investors broad exposure to the Broad Developed World ETFs category of the market.

Is iShares International Small-Cap Equity Factor ETF (ISCF) a Strong ETF Right Now?

A smart beta exchange traded fund, the iShares International Small (ISCF) debuted on 04/28/2015, and offers broad exposure to the Broad Developed World ETFs category of the market.

Is iShares International Small (ISCF) a Strong ETF Right Now?

Is iShares MSCI Intl SmallCap Multifactor ETF (ISCF) a Strong ETF Right Now?

The US stock market is expensive, and forward returns are not exciting.

ISCF Might Be The Best Way To Invest Internationally

In “International Small-Cap Equities: Poised to Outperform” I described the upside opportunity due to mean reversion, favorable valuations, the prospects for a declining dollar, and a worldwide economic recovery. The small cap sector is the cheapest since 2000. Historically, this has resulted in an annual return size premium of seven percentage points over subsequent three-year periods.

News for iShares MSCI International Small-Cap Multifactor ETF ETF (ISCF)