Indexing has grown substantially in recent years

As indexing has become more mainstream, the number of products available and the amount invested in them has increased significantly1. The chart shows growth in assets under management and number of products domiciled in Europe, Middle East and Africa.

 

Indexing

1Source: BlackRock Investment Institute - ETP Research, Bloomberg, Strategic Insight Simfund GL, 2012

"So what do I do with my money?"

As with all other investments, it’s important to do your research before you invest in an index fund, and understand that pricing should only be one consideration in your choice of investment. Although on the surface different funds that track the same index might appear to do the same thing, there are key differentiators between index providers and funds which means they can produce different results. Look to larger providers, who have more assets, and so are in a better position to negotiate trades, and also tend to have more dedicated indexing resources and well-established systems and management teams.


“Tracking Markets Efficiently with ETFs” with Mark Wiedman

All financial investments involve an element of risk to both income and capital. ETFs and index tracking mutual funds seek to track a benchmark and holdings are not altered during rising or falling markets. Some ETFs are optimised and therefore may not hold all securities within the benchmark index. Performance may differ from the underlying benchmark index. Further information regarding the risks of investment is provided at the bottom of this page.

 

From our experts

For professional investors only

1 Source: BlackRock Investment Institute - ETP Research, Bloomberg, Strategic Insight Simfund GL, 2012.The opinions expressed are those of BlackRock as of October 2012 and are subject to change at any time due to changes in market or economic conditions.

This material is not intended to be relied upon as a forecast, research or investment advice and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any strategy in any jurisdiction in which such offer, solicitation or distribution would be unlawful or in which the person making such offer or solicitation is not qualified to do so or to anyone to whom it is unlawful to make such offer or solicitation. It is your responsibility to be aware of the applicable laws and regulations of your country of residence.

BlackRock has not considered the suitability of investment against your individual needs and risk tolerance.  To ensure that you understand whether a financial product is available to you and whether it is suitable to meet your investment needs, please speak to your financial adviser.

All financial investments involve an element of risk. The value of your investment and the income from it will vary and your initial investment amount cannot be guaranteed.  Past performance is not a guide to future performance and should not be the sole factor of consideration when selecting a product.  Overseas investments may involve risk of capital loss from unfavourable fluctuation in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations.  Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume.

Exchange Traded Funds (ETFs) and index tracking mutual funds seek to track a benchmark and holdings are not altered during rising or falling markets.  Some ETFs are optimised and therefore may not hold all securities within the benchmark index.  Performance may differ from the underlying benchmark index.  ETFs trade on exchanges intraday at the current market price which may differ from net asset value.  Transaction or brokerage fees will apply.  Liquidity is not guaranteed.  Active and index tracking mutual funds can usually be accessed at a single valuation point each business day at net asset value adjusted for applicable dealing charges and fees.Diversification and asset allocation may not protect you fully against market risk.

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