A sound investment process and strong management team underpin iShares MSCI Water Mgmt Mltsctr ETF's Morningstar Medalist Rating of Gold. The portfolio maintains a sizable cost advantage over competitors, priced within the least expensive 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 a significant underweight position in liquidity exposure and volatility exposure compared with category peers. Low liquidity risk exposure is attributed to stocks with a low trading volume, limiting managers' flexibility. And low volatility exposure is rooted in stocks that have a lower 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

Xylem

Marriott

Ecolab

Texas Instruments

Core & Main

Hilton Worldwide Holdings

American Water Works

Watts Water Technologies

Badger Meter

Franklin Electric

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category index on a risk-adjusted basis over the long term. iShares MSCI Water Mgmt Mltsctr ETF earns a High Process Pillar rating. The most important driver of 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. The firm's five-year retention rate of 92% also contributes to the process. The parent firm's five-year risk-adjusted success ratio of 55% contributes to the process. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. Their compelling success ratio suggests that this firm does well for investors and that this fund may benefit from that.

The investment strategy as stated in the fund's prospectus is:  The investment seeks to track the MSCI ACWI IMI Sustainable Water Transition Extended Capped Index composed of U.S. and non-U.S. companies that either 1) derive a proportion of their revenues from sustainable water products or services or 2) demonstrate relative efficiency in their water management.  It invests at least 90% of its assets in the component securities of the index and in investments that have economic characteristics that are substantially identical to the component securities of the index and may invest up to 10% of its assets in certain futures, options and swap contracts, and cash and cash equivalents. It is non-diversified. 

 The portfolio is overweight in industrials and technology relative to the category average by 26.7 and 13.0 percentage points, respectively. The sectors with low exposure compared to category peers are basic materials and energy, underweight the average by 38.2 and 27.8 percentage points of assets, respectively. The strategy owns 65 securities and is relatively top-heavy. Of the strategy's assets, 55.4% are concentrated within the top 10 holdings, as opposed to the category’s 23.9% average. And in closing, in terms of portfolio turnover, on a year-over-year basis, 51% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

High

Process

iShares MSCI Water Mgmt Mltsctr ETF benefits considerably from its team, earning it an Above Average People Pillar rating. There are three managers listed on the fund: Paul Whitehead, Jennifer Hsui, Greg Savage. The team is well equipped, with an average of 18 years of portfolio management experience. Together, they manage a total of 257 strategies, with solid long-term prospects. The strategies average a Silver asset-weighted Morningstar Medalist Rating, indicating a position 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 Water Management Multisector ETF

IWTR tracks a tier-weighted index of global companies that derive revenue from sustainable water or demonstrate relatively efficient water management.  

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The fund includes companies in water-related businesses and those demonstrating sound water management.

News for iShares MSCI Water Management Multisector ETF ETF (IWTR)