A sound investment process and strong management team underpin iShares Global Materials ETF's Morningstar Medalist Rating of Silver. The portfolio maintains a sizable cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy's effective investment philosophy supports 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 quality exposure compared with category peers. Low liquidity risk exposure is attributed to stocks with a low trading volume, limiting managers' flexibility. And a high quality exposure is rooted in holding stocks with low financial leverage and strong returns on equity. 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

Linde

BHP Billiton

C3.ai

Rio Tinto plc Sponsored

Sherwin-Williams

Freeport-McMoRan

CRH Plc Sponsored ADR

Ecolab

Air Products and Chemicals

Basic Energy Services

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 Global Materials ETF earns a High Process Pillar rating. The leading factor in the rating is the fund's impressive long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category average, which suggests that the process was successful over that period. This fund tracks an index, which also increases its process rating. Historical data, like Morningstar's Active/Passive Barometer, shows that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. The firm's five-year retention rate of 92% strengthens the process as well.

The investment strategy as stated in the fund's prospectus is:  The investment seeks to track the investment results of the S&P Global 1200 Materials IndexTM composed of global equities in the materials sector.  The index measures the performance of companies that SPDJI deems to be part of the materials sector of the economy and that SPDJI believes are important to global markets. The fund generally will invest at least 80% of its assets in the component securities of its index and in investments that have economic characteristics that are substantially identical to the component securities of its index and may invest up to 20% of its assets in certain futures, options and swap contracts, and cash and cash equivalents. 

 The portfolio is overweight in basic materials by 46.2 percentage points in terms of assets compared with the category average, and its consumer cyclical allocation is similar to the category. The sectors with low exposure compared to category peers are energy and industrials, underweight the average by 27.8 and 10.5 percentage points of assets, respectively. The portfolio is positioned across 133 holdings and is relatively top-heavy. Of the strategy's assets, 38.0% are concentrated within the top 10 holdings, compared to the category’s 23.9% average. And finally, in terms of portfolio turnover, looking at year-over-year movements, 9% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

High

Process

iShares Global Materials ETF benefits considerably from its equity 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 Global Materials ETF

MXI tracks a market-cap-weighted index of global materials companies.

Commodities show signs of momentum as inflation picks up, making the Materials sector a good investment opportunity. The iShares Global Materials ETF offers access to a diversified portfolio of companies in the materials sector. The MXI ETF provides global exposure, potential growth, but also comes with sector-specific risk, geopolitical risk, and market volatility.

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MXI's essential goal is to track the investment results of the S&P Global 1200 Materials Sector Index. As of December 18, MXI had a portfolio of 127 holdings. From this list, 103 items were classified as Equity.

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