iShares MSCI Frontier and Select EM ETF (FM)FM

ETF iShares MSCI Frontier and Select EM ETF (FRN)

Profile

Overview: The iShares MSCI Frontier and Select EM ETF (FRN) is a passively managed exchange-traded fund (ETF) that tracks the performance of the MSCI Frontier and Select EM 100 Index. This index comprises stocks from small and developing economies, including frontier markets and select emerging markets.

Focus: The ETF primarily focuses on emerging markets with high growth potential. It allocates assets across various sectors, including financials, energy, materials, and consumer discretionary.

Investment Strategy: FRN employs a buy-and-hold strategy, investing in the underlying index constituents in the same proportions as the index. The ETF rebalances its portfolio quarterly to maintain alignment with the index.

Objective

The primary objective of FRN is to provide investors with exposure to the growth potential of frontier and select emerging markets. It aims to track the performance of the underlying index and offer diversification across various sectors and geographies.

Issuer

BlackRock: BlackRock, Inc. (BLK) is the issuer of FRN. BlackRock is a leading global investment management company with a reputation for strong financial performance, innovative products, and a commitment to sustainability.

Reputation and Reliability: BlackRock has a strong reputation in the financial industry, with a long history of managing assets for institutional and individual investors. The company is known for its robust risk management practices and commitment to client service.

Management: The iShares ETF Trust is responsible for managing FRN. The trust is overseen by a team of experienced investment professionals with expertise in emerging markets and index investing.

Market Share

FRN has a relatively small market share in the emerging markets ETF space, with assets under management of approximately $417 million as of November 7, 2023.

Total Net Assets

As of November 7, 2023, FRN has total net assets of approximately $417 million.

Moat

Diversification: FRN's broad exposure across various frontier and select emerging markets mitigates concentrated risks and provides diversification benefits.

Low Fees: FRN's expense ratio of 0.59% is relatively low compared to other emerging markets ETFs.

Liquidity: FRN is a relatively liquid ETF, with an average daily trading volume of over 200,000 shares.

Financial Performance

Historical Performance: FRN has delivered positive returns over the past one, three, and five years, outperforming the MSCI Emerging Markets Index.

Benchmark Comparison: FRN has consistently outperformed the MSCI Emerging Markets Index, demonstrating its effectiveness in tracking the performance of the underlying index.

Growth Trajectory

The growth trajectory of FRN is tied to the performance of frontier and select emerging markets. These markets are expected to experience robust economic growth in the coming years, driven by factors such as increasing urbanization, rising disposable incomes, and technological advancements.

Liquidity

Average Trading Volume: FRN has an average daily trading volume of over 200,000 shares, indicating good liquidity.

Bid-Ask Spread: The bid-ask spread for FRN is typically narrow, ranging between 0.05% and 0.10%, ensuring low transaction costs.

Market Dynamics

Economic Indicators: Strong economic growth in frontier and select emerging markets is a key driver of FRN's performance.

Sector Growth Prospects: The sectors represented in FRN, such as financials, energy, and materials, are expected to benefit from continued economic expansion in these markets.

Current Market Conditions: Global economic conditions, interest rate policies, and geopolitical events can impact FRN's performance.

Competitors

• iShares MSCI Emerging Markets ETF (EEM)
• Vanguard FTSE Emerging Markets ETF (VWO)
• Xtrackers MSCI Emerging Markets ex China ETF (EMXC)

Expense Ratio

The expense ratio for FRN is 0.59%.

Investment Approach and Strategy

Strategy: FRN tracks the MSCI Frontier and Select EM 100 Index, replicating its performance.

Composition: The ETF holds a diversified portfolio of stocks from frontier and select emerging markets across various sectors.

Key Points

• Provides exposure to high-growth frontier and select emerging markets.
• Tracks the performance of the MSCI Frontier and Select EM 100 Index.
• Offers diversification across sectors and geographies.
• Low expense ratio.
• Relatively liquid.

Risks

Volatility: Emerging markets are generally more volatile than developed markets, leading to potential price fluctuations.

Market Risk: FRN's performance is tied to the underlying markets, which can be affected by economic, political, and social factors.

Currency Risk: FRN's exposure to emerging markets currencies can lead to potential gains or losses due to currency fluctuations.

Who Should Consider Investing

FRN is suitable for investors seeking:

• Exposure to high-growth potential of frontier and select emerging markets.
• Diversification across various sectors and geographies.
• A passively managed ETF with a low expense ratio.

Fundamental Rating Based on AI

Rating: 7/10

Justification: FRN's strong performance, low expense ratio, and exposure to high-growth markets are positive factors. However, its relatively small market share and higher volatility compared to broader emerging markets ETFs are limitations.

Resources and Disclaimers

Resources:

• iShares Website: https://www.ishares.com/us/products/etf/overview/frn
• BlackRock Website: https://www.blackrock.com/us/individual/products/etfs/ishares-msci-frontier-and-select-em-etf-frn
• Morningstar: https://www.morningstar.com/etfs/arcx/frn/performance

Disclaimer: The information provided in this analysis should not be considered as financial advice. Investors should conduct their own due diligence and consult with a financial professional before making any investment decisions.