ETF & iShares Frequently Asked Questions

Q: What are iShares®?

iShares are a family of Exchange Traded Funds (ETFs).  iShares are essentially index mutual funds that trade like a stock. iShares offer you the diversification and low costs of index funds plus the flexibility, convenience and liquidity of stocks.

Q: What company stands behind iShares?

Barclays Global Investors (BGI), a wholly-owned subsidiary of Barclays Bank PLC, is the company behind iShares. BGI is one of the world's largest asset managers and created the world’s first index strategy over thirty years ago. It launched iShares in 2000.

Q: What is the relationship between BGI and ChartwellETF.com?

ChartwellETF.com is sponsored by Chartwell Partners which is a private firm completely independent of iShares and Barclays Global Investors.

Q: How can ChartwellETF.com help me with my investments?

ChartwellETF.com will give you an extra edge by offering you an independent and global perspective, a variety of practical strategies and model portfolios. This should help you and your advisors put together a portfolio that meets your goals, time horizon and risk profile.

Q: How do I buy ETFs?

It is easy to buy and sell ETFs through any brokerage account including online “discount” brokers. ETFs trade on the American Stock Exchange, the Chicago Board Options Exchange, and the New York Stock Exchange.  Keep in mind that ETFs are not shares of a company but rather ETFs are shares of a portfolio or “basket” of companies that closely tracks a variety of market indices.

Q: How do the management fees of iShares compare with actively managed mutual funds?

The annual management fees of ETFs are significantly lower than actively managed mutual funds and normally lower than mutual index funds. This cost advantage is only marginally diminished by the need to pay brokerage commissions on ETF transactions, especially if you use a “discount” broker. 

Q: Are there any potential tax advantages to using ETFs?

Yes, ETFs give you more control and, compared to traditional mutual funds, can potentially lower your annual capital gains distributions. As an index fund, ETFs will normally buy and sell securities less often than actively managed mutual funds. In addition, mutual fund shareholder decisions to purchase or redeem shares from the fund may lead to capital gains distributions to all shareholders, no matter how you may have been in the fund.

Q: Can I reinvest dividends earned by my ETFs?

Yes. If your broker-dealer (brokerage firm) offers you a dividend reinvestment program (DRIP) as many do, iShares can be part of that program.

Q: Are there any fixed income ETFs

Yes, there are currently six fixed income ETFs available to you. These offer you many of the same advantages relative to actively managed bond funds. Fixed income iShares track fixed income indexes such as the Lehman 1-3 Year Treasury Bond Index.

Q: When do fixed income ETFs mature and when are dividends distributed?

The fixed income ETF funds themselves never mature. Instead the funds will sell securities before they mature and re-invest the proceeds. Consistent with bond mutual funds, fixed income ETFs distribute dividends monthly.