In order to avoid tracking error risk, BlackRock is fully replicating the underlying index on six more ETFs, including three hedged S&P 500 ETFs.However, BlackRock announced that the investment strategy of three S&P 500 hedged ETFs, a US quality ETF, an Asia ETF excluding Japan, and a North America ETF would all convert from non-replicating …
In order to avoid tracking error risk, BlackRock is fully replicating the underlying index on six more ETFs, including three hedged S&P 500 ETFs.
However, BlackRock announced that the investment strategy of three S&P 500 hedged ETFs, a US quality ETF, an Asia ETF excluding Japan, and a North America ETF would all convert from non-replicating to replicating in September.
According to BlackRock, by employing a non-replicating technique, ETFs may be unable to hold the full weighting of the members in the underlying index, potentially raising the tracking error inaccuracy of its benchmark’s performance.
The ETFs will adhere to the guidelines, which allow them to invest up to 20% of the fund in a single stock.
It follows the transition to fully replicating three ETFs by the world’s largest asset manager last month, as well as modifications to two more ETFs in March.
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