iShares Pacific ex Japan Equity Index: April 2026 fund update

• BlackRock has been managing index portfolios since 1971

• This fund provides low-cost exposure to hundreds of companies across Asia and the Pacific

• It’s closely tracked the FTSE World Asia-Pacific ex-Japan Index since launch

• This fund features on our Wealth Shortlist of funds chosen by our analysts for their long-term performance potential

How it fits in a portfolio

The iShares Pacific ex Japan Equity Index fund invests in the Asia-Pacific region, home to some of the most dynamic economies in the world. It’s made up of large and medium-sized companies in developed markets as well as advanced emerging markets.

Emerging markets have the potential to grow strongly over the long term, though they’re higher risk.

An index tracker fund is one of the simplest ways to invest and can be a low-cost starting point for an investment portfolio aiming to deliver long-term growth. We think this fund could be used to diversify a global portfolio or could be a good addition to a portfolio of tracker funds.

Manager

Dharma Laloobhai is Co-Head of International Index Equity Investments at BlackRock. She oversees the fund managers responsible for iShares equity index funds and exchange-traded funds (ETFs) across Europe, the Middle East, Africa and the Asia-Pacific region. Laloobhai has 25 years of industry experience, with 19 at BlackRock.

Every equity index fund at BlackRock has a primary, secondary and tertiary manager, who each have the ability to run the fund, along with the wider team. The wider team is well-resourced and experienced in index investing.

BlackRock’s global approach allows them to work closely with their teams across the world, aiding more efficient management of their funds. We have positive conviction in BlackRock’s ability to provide simple and effective tracking options for investors.

Process

This fund aims to track its benchmark, the FTSE World Asia-Pacific ex-Japan index, by investing in every company in the index and in the same proportion. This is known as full replication and helps to closely match the performance of the index.

The fund is currently made up of 610 companies with just over half of the fund invested in the technology and financial sectors. Taiwan, South Korea and Australia account for 34.5%, 27.9% and 21.7% respectively. South Korea isn’t included in all Pacific ex-Japan indices but makes up a big part of this fund’s benchmark.

Keeping costs low is a key part of the team’s strategy to track the index closely. The fund managers communicate with local teams across the Asia-Pacific region to ensure trades are placed at the best price, keeping costs low.

The fund can lend some of its investments to other investors in exchange for a fee in a process known as stock lending. This helps to offset some of the costs of running the fund. Since BlackRock’s lending program started in 1981, only three borrowers with active loans have defaulted. In each case, BlackRock was able to repurchase every security out on loan with collateral on hand and without any losses to their clients. Even so, stock lending adds risk.

The fund has tracking error targets, which measure how closely it's tracking its benchmark. These are monitored by BlackRock on a daily and monthly basis to ensure the fund is being run efficiently.

Culture

BlackRock is currently the largest asset manager in the world, running around $14trn of assets globally. The company was founded by eight partners including current CEO Larry Fink and is known for both active and passive strategies. Employees at BlackRock are encouraged to hold shares in the company so that they are engaged with helping the company perform well and grow. The iShares brand represents BlackRock's family of index tracking and exchange-traded funds.

As the world's largest asset manager, and with lots of resource and knowledge under its belt, BlackRock benefits from unique access to the marketplace, which can help reduce trading costs. BlackRock is also a pioneer in the passive investment space and has a track record of innovation in this part of the investment market.

The team running this fund works closely with various equity and risk departments across the business. We believe this adds good support and challenge on how to run the fund effectively.

ESG Integration

BlackRock was an early signatory to the PRI and has offered ESG-focused funds for several years, including through its iShares range of passive products. However, it only made a company-wide commitment to ESG in January 2020. Following that announcement, the company has expanded its range of ESG-focused ETFs, screened some thermal coal companies out from its actively managed funds and requires all fund managers to consider ESG risks.

BlackRock’s Investment Stewardship Team aims to vote at 100% of meetings where it has the authority to do so. The Investment Stewardship team engages with companies, in conjunction with fund managers, and the results of proxy votes can be found on the BlackRock website’s ‘proxy voting search’ function.

BlackRock has courted controversy in recent years for failing to put its significant weight behind shareholder resolutions aimed at tackling climate change. It responded by committing to be more transparent on its voting activity and providing rationales for key votes.

BlackRock raised further concerns in 2022 when it indicated it might support fewer shareholder proposals based on environmental and social issues in the future. However, its support for shareholder resolutions has fallen dramatically, from 40% in 2021 to just 4% in 2024. BlackRock argues that many of the resolutions were overreaching, lacked economic merit or didn’t promote long-term shareholder value, but this reasoning has been met with some scepticism.

In 2024, BlackRock announced that its US arm would step back from the Climate Action 100+ collective engagement initiative, citing legal considerations, although it suggested its international arm would remain a member.

Of the funds under HL’s research coverage, this is one of the most carbon intense. The companies within the fund may face increased scrutiny from investors and regulators, as well as higher costs associated with carbon emissions management and potential carbon pricing mechanisms, potentially impacting the fund’s performance.

However, as this is a passive tracker fund its makeup represents the FTSE World Asia-Pacific ex-Japan Index, and the team has no control over the companies included in the fund. Although, an ESG version of the fund is available.

Cost

The fund usually has an ongoing annual fund charge of 0.11%, but we’ve negotiated a 0.02% saving so it’s available to HL clients for 0.09%. We believe this is excellent value when compared with other passive funds in this sector. This is the lowest cost fund on the HL platform for passively tracking the Pacific ex-Japan market.

We recently made some changes to the amount clients pay to invest with us. Find out more about these changes

Our platform charge of up to 0.35% per year also applies, except in the HL Junior ISA, where no platform charge applies.

Performance

Since the fund launched in August 2005, it’s tracked the FTSE World Asia-Pacific ex-Japan Index well. Over the last 10 years, the fund has risen 212.74%*. As is typical of index tracker funds, it’s fallen behind the benchmark over the long term because of the costs involved in running the fund. However, the tools used by the managers have helped to keep performance close to the index.

Over the past 12 months, the fund has gained 53.54%. Remember, past performance isn’t a guide to future returns.

Taiwan’s stock market contributed the most to the fund’s performance over the year, mainly driven by its technology sector. It’s home to world-leading semiconductor giant Taiwan Semiconductor Manufacturing Company (TSMC), which has benefited from strong demand for chips powering Artificial Intelligence (AI) tools. This has boosted the company’s profits and share price.

South Korea also significantly contributed to the fund’s overall returns. SK Hynix and Samsung Electronics, companies playing a leading role in the AI boom, helped push the market to record highs. The country also elected a new president who has outlined plans for market reform, which investors have viewed favourably.

Because Korea has performed so strongly, Pacific ex-Japan index funds that track benchmarks that include Korea, like this fund, have performed better over the last year than ones that don’t. This difference has been larger than we’d usually expect.

Given BlackRock's size, experience and expertise running index tracker funds, we expect the fund to continue to track the index closely in the future, though there are no guarantees.

The period between 31 March 2021 and 31 March 2022 reflects the performance of the D Class version of the fund. Performance from 31 March 2022 onwards reflects the performance of the S class version of the fund. This is due to when each share class was launched.