BlackRock to Improve iShares ETF Tracking Error with New Replicating Strategy.

BlackRock's iShares STOXX Europe Equity Multifactor UCITS ETF (FSEU) will switch from an optimization strategy to a replicating index tracking strategy, reducing tracking error and improving efficiency. The change in methodology comes after the ETF underperformed its benchmark every year since its launch in 2015 with an average annualized shortfall of 20 basis points. Investors are paying 25bps via the total expense ratio for this underperformance, while BlackRock earns around €0.7m in fees annually. The change of benchmark also means that the top 10 constituents, sector and country weights, and factor exposures have shifted.