A sound investment process and strong management team underpin iShares® ESG Advanced MSCI USA ETF's Morningstar Medalist Rating of Gold. The portfolio maintains a sizable cost advantage over competitors, priced within the lowest 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 quality exposure and an overweight in yield exposure compared with category peers. Low quality exposure is attributed to stocks with higher financial leverage and lower profitability. And a high yield exposure is rooted in holding high dividend-paying or buyback stocks. 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

NVIDIA

Broadcom

Visa

Mastercard

Home Depot

Advanced Micro Devices

Adobe

Linde

QUALCOMM

Danaher

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® ESG Advanced MSCI USA ETF earns a High Process Pillar rating. The most significant contributor to the rating is that this fund tracks an index. Historical data, like Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. The parent firm's five-year risk-adjusted success ratio of 55% also influences the rating. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. Their impressive success ratio suggests that the firm does well for investors and that this fund may benefit from that. The firm's five-year retention rate of 92% supports 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 MSCI USA Choice ESG Screened Index (the “underlying index”).  The underlying index is a free float-adjusted market capitalization-weighted index designed to reflect the equity performance of large- and mid-capitalization U.S. companies with favorable environmental, social and governance (“ESG”) ratings while applying extensive screens, and including removing fossil fuel exposure. The fund generally will invest at least 90% of its assets in the component securities of the underlying index. It is non-diversified. 

 The portfolio is overweight in financial services and industrials relative to the category average by 9.3 and 6.4 percentage points, respectively. The sectors with low exposure compared to category peers are communication services and consumer cyclical, underweight the average by 8.8 and 5.8 percentage points of assets, respectively. The strategy owns 372 securities and its assets are more dispersed than the typical peer in the category. In the most recent disclosure, 27.8% of the strategy's assets were concentrated in the top 10 fund holdings, as opposed to the category average's 53.2%. And finally, in terms of portfolio turnover, looking at year-over-year movements, 12% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

High

Process

iShares® ESG Advanced MSCI USA ETF benefits considerably from its team, earning it an Above Average People Pillar rating. There are three managers listed on the fund: Greg Savage, Jennifer Hsui, Paul Whitehead. Experience on the team is abundant, with 18 years of average portfolio management experience. Together, they manage a total of 258 strategies, with a Silver asset-weighted average Morningstar Medalist Rating, indicating the 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 ESG Advanced MSCI USA ETF

USXF tracks an index of large- and mid-cap US equities screened for positive environmental, social and governance rating while also screening for involvement in controversial activities.

iShares® ESG Advanced MSCI USA ETF implements an environmental, social, and corporate governance (“ESG”) strategy focused on large companies. The USXF ETF displays expensive valuation ratios, superior growth rates, and some excess return relative to the S&P 500. USXF has performed quite well relative to other ESG funds. Nonetheless, it may have deeper drawdowns than the benchmark in a downturn.

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