Chances are if you invest in or know about exchange-traded funds, you know something about iShares. iShares is the world’s largest ETF issuer and a unit of BlackRock, Inc. (NYSE:BLK), the world’s largest asset manager.
When it comes to pure ETF heft, iShares is, at this point the evolution of the ETF business, nearly untouchable. The firm offers nearly 330 ETFs in the U.S. and as of March 16, those funds combined for $817.5 billion in assets under management.
To put that into perspective, Vanguard, the second-largest U.S. ETF issuer, had $490.4 billion in ETF assets.
Last year, iShares ETFs hauled in $130 billion of the $347 billion that investors allocated to ETFs and was the leading asset gatherer in the U.S. and Europe.
So it is not a stretch to say that when it comes to ETFs, iShares has brand recognition on par with The Coca-Cola Co (KO) in the world of soft drinks or Apple Inc. (AAPL) in the technology space. Still, with almost 330 ETFs available in the U.S., some iShares ETFs go undiscovered.
Let’s have a look at some of the iShares ETFs that have hidden gem status but also merit consideration for places in investors’ portfolios.
Overlooked iShares ETFs: iShares Core High Dividend ETF (NYSEArca:HDV)
Expenses: 0.12%, or $12 for each $10,000 invested
Home to $4.74 billion in assets under the management, the iShares Core High Dividend ETF (NYSEArca:HDV) is neither diminutive nor is it entirely unheard of. However, this iShares ETF is overshadowed by its larger family member, the iShares Select Dividend ETF (NYSEArca:DVY).
Although HDV does not feature the massive utilities weight found in DVY, this iShares ETF features a tantalizing trailing 12-month dividend yield of nearly 3.9%.
HDV, which debuted five years ago, follows the Morningstar Dividend Yield Focus Index. That benchmark screens for companies with the ability to sustain high dividends.
So it can be argued that HDV’s 20.5% weight to the energy sector is interesting because that sector has accounted for the bulk of negative dividend action in the S&P 500 over the past year. However, Dow components Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX) account for the bulk of this iShares ETF’s energy weight, and neither has recently been a dividend cutter.
With an 18.7% weight to staples stocks, HDV also becomes a great place to hide out during tumultuous markets, as highlighted by the ETF’s modest three-year standard deviation of 9.9%.
This iShares ETF is a member of the issuer’s core lineup, meaning it carries a low fee. HDV charges just 0.12% per year.
Overlooked iShares ETFs: iShares MSCI Emerging Markets Minimum Volatility ETF (NYSEArca:EEMV)
Thanks in large part to the iShares MSCI Emerging Markets ETF (NYSEArca:EEM) and the largest lineup of single-country emerging markets ETFs of any isssuer, iShares is the dominant name when it comes ETFs tracking developing markets.
Due to the professional community’s affinity for EEM and the focus paid to select single-country ETFs, is easy for some funds in the iShares emerging markets stable to go overlooked. That should not be the case with the iShares MSCI Emerging Markets Minimum Volatility ETF (EEMV).
Like the aforementioned HDV, EEMV is not small. The low-volatility emerging-markets ETF has over $3.1 billion in assets.
The aim of low-volatility ETFs like EEMV is to be less bad than their non-low-vol counterparts when markets weaken. This iShares ETF has done its job and done it pretty well. Over the past three years, EEMV is down 8%, which sounds bad, but that is over 500 basis points better than EEM over the same period.
As a low-volatility iShares ETF, EEMV skimps on the most volatile emerging markets. For example, EEMV’s weight to Brazil is just over 1% and the ETF holds no Russian stocks.
Overlooked iShares ETFs: iShares MSCI USA Value Factor ETF (NYSEArca:VLUE)
Perhaps you’ve heard about factor investing. If you own an ETF like EEMV, you’re investing in a factor … in that case, low volatility. Other widely followed investment factors include growth, quality and value. And if you’re familiar with the value factor, there is a fair chance you’ve heard how that factor has been a laggard in recent years.
That is changing this year, as the value factor is making a comeback, which in turn renewed attention on the iShares MSCI USA Value Factor ETF (VLUE). This iShares ETF follows the MSCI USA Enhanced Value Index, which uses price-to-book, price-to-forward-earnings and enterprise-value-to-cash-flow as the pillars of its methodology, according to MSCI.
While technology stocks are often thought of as growth or momentum plays, the sector is VLUE’s largest allocation at 21%. This iShares ETF’s other interpretations of value include weights of more than 14% each to financial services and healthcare stocks.
VLUE’s top 10 holdings include Dow components Cisco Systems, Inc. (NASDAQ:CSCO), Intel Corporation (NASDAQ:INTC) and Pfizer Inc. (NYSE:PFE). This iShares ETF charges just 0.15% per year, which is low among smart-beta funds.
Todd Shriber does not own any of the securities mentioned here.