Review the MSCI methodology behind the Sustainability Characteristics and Business Involvement metrics: 1ESG Fund Ratings; 2Index Carbon Footprint Metrics; 3Business Involvement Screening Research; 4ESG Screened Index Methodology; 5ESG Controversies; 6MSCI Implied Temperature Rise
For funds with an investment objective that include the integration of ESG criteria, there may be corporate actions or other situations that may cause the fund or index to passively hold securities that may not comply with ESG criteria. Please refer to the fund’s prospectus for more information. The screening applied by the fund's index provider may include revenue thresholds set by the index provider. The information displayed on this website may not include all of the screens that apply to the relevant index or the relevant fund. These screens are described in more detail in the fund’s prospectus, other fund documents, and the relevant index methodology document.
Certain information contained herein (the “Information”) has been provided by MSCI ESG Research LLC, a RIA under the Investment Advisers Act of 1940, and may include data from its affiliates (including MSCI Inc. and its subsidiaries (“MSCI”)), or third party suppliers (each an “Information Provider”), and it may not be reproduced or redisseminated in whole or in part without prior written permission. The Information has not been submitted to, nor received approval from, the US SEC or any other regulatory body. The Information may not be used to create any derivative works, or in connection with, nor does it constitute, an offer to buy or sell, or a promotion or recommendation of, any security, financial instrument or product or trading strategy, nor should it be taken as an indication or guarantee of any future performance, analysis, forecast or prediction. Some funds may be based on or linked to MSCI indexes, and MSCI may be compensated based on the fund’s assets under management or other measures. MSCI has established an information barrier between equity index research and certain Information. None of the Information in and of itself can be used to determine which securities to buy or sell or when to buy or sell them. The Information is provided “as is” and the user of the Information assumes the entire risk of any use it may make or permit to be made of the Information. Neither MSCI ESG Research nor any Information Party makes any representations or express or implied warranties (which are expressly disclaimed), nor shall they incur liability for any errors or omissions in the Information, or for any damages related thereto. The foregoing shall not exclude or limit any liability that may not by applicable law be excluded or limited.
Carefully consider the Funds' investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the Funds' prospectuses or, if available, the summary prospectuses, which may be obtained by visiting the iShares Fund and BlackRock Fund prospectus pages. Read the prospectus carefully before investing.
Investing involves risk, including possible loss of principal.
If the Fund invests in any underlying fund, certain portfolio information, including sustainability characteristics and business-involvement metrics, provided for the Fund may include information (on a look-through basis) of such underlying fund, to the extent available.
Fixed income risks include interest-rate and credit risk. Typically, when interest rates rise, there is a corresponding decline in the value of debt securities. Credit risk refers to the possibility that the debt issuer will not be able to make principal and interest payments.
Non-investment-grade debt securities (high-yield/junk bonds) may be subject to greater market fluctuations, risk of default or loss of income and principal than higher-rated securities.
There can be no assurance that performance will be enhanced or risk will be reduced for funds that seek to provide exposure to certain quantitative investment characteristics ("factors"). Exposure to such investment factors may detract from performance in some market environments, perhaps for extended periods. In such circumstances, a fund may seek to maintain exposure to the targeted investment factors and not adjust to target different factors, which could result in losses.
Performance shown reflects fee waivers and/or expense reimbursements by the investment advisor to the fund for some or all of the periods shown. Performance would have been lower without such waivers.
Shares of ETFs are bought and sold at market price (not NAV) and are not individually redeemed from the fund. Any applicable brokerage commissions will reduce returns. Beginning August 10, 2020, market price returns for BlackRock and iShares ETFs are calculated using the closing price and account for distributions from the fund. Prior to August 10, 2020, market price returns for BlackRock and iShares ETFs were calculated using the midpoint price and accounted for distributions from the fund. The midpoint is the average of the bid/ask prices at 4:00 PM ET (when NAV is normally determined for most ETFs). The returns shown do not represent the returns you would receive if you traded shares at other times.
Index returns are for illustrative purposes only. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results.
After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts.
Certain sectors and markets perform exceptionally well based on current market conditions and iShares and BlackRock Funds can benefit from that performance. Achieving such exceptional returns involves the risk of volatility and investors should not expect that such results will be repeated.
Distribution Yield and 12m Trailing Yield results may have period over period volatility due to factors including tax considerations such as treatment of passive foreign investment companies (PFICs), treatment of defaulted bonds or excise tax requirements; exceptional corporate actions; seasonality of dividends from underlying holdings; significant fluctuations in fund shares outstanding; or fund capital gain distributions.
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As an expert in sustainable investing and financial methodologies, I have a deep understanding of the MSCI methodology and its application in evaluating sustainability characteristics and business involvement metrics. My expertise extends to various concepts mentioned in the provided article, including:
ESG Fund Ratings: MSCI's ESG Fund Ratings involve evaluating funds based on Environmental, Social, and Governance (ESG) criteria. This process considers a fund's alignment with sustainability goals, taking into account its investments and overall impact on ESG factors.
Index Carbon Footprint Metrics: The index carbon footprint metrics measure the environmental impact of a fund's investments in terms of carbon emissions. MSCI likely employs specific methodologies to calculate and report these metrics, providing investors with insights into the carbon footprint associated with the fund's holdings.
Business Involvement Screening Research: MSCI conducts business involvement screening research to assess the extent to which companies in a fund's portfolio are involved in specific activities or industries. This screening helps investors understand the social and ethical implications of their investments.
ESG Screened Index Methodology: The ESG Screened Index Methodology is a set of rules and criteria used by MSCI to construct indices that incorporate ESG considerations. This involves filtering out companies that do not meet certain sustainability standards or exhibit specific business practices.
ESG Controversies: MSCI provides insights into ESG controversies, which may include controversies related to environmental, social, or governance issues involving companies in a fund's portfolio. This information assists investors in making informed decisions based on the ethical implications of their investments.
MSCI Implied Temperature Rise: The MSCI Implied Temperature Rise is likely a metric that estimates the potential temperature increase associated with a fund's investment portfolio. This metric helps investors gauge the climate impact of their investments and align them with climate change mitigation goals.
The article emphasizes the importance of considering the fund's prospectus for detailed information, including specific screening criteria and revenue thresholds applied by the index provider. It also highlights the role of MSCI ESG Research LLC and the information barrier established between equity index research and certain information to ensure objectivity.
Investors are reminded to carefully consider factors such as risk, fees, and expenses before making investment decisions. The article also touches on performance considerations, tax implications, and the disclaimer that the information provided by MSCI and BlackRock should not be used for making investment decisions without thorough evaluation.
In conclusion, understanding the MSCI methodology is crucial for investors seeking sustainable and responsible investment options, and the mentioned concepts play a key role in evaluating and selecting funds aligned with ESG criteria.