what is an etf

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In a first trading period (for example, a day), the index rises 10% to 110. [92], The first leveraged ETF was issued by ProShares in 2006. Essential to this transition has been the growing availability and affordability of sustainable investment options. What Is an ETF? The FTSE EPRA/NAREIT Developed Asia Dividend+ Index, FTSE EPRA/NAREIT Developed Dividend+ Index, FTSE EPRA/NAREIT Developed Europe ex UK Dividend+ Index, FTSE EPRA/NAREIT UK Index and FTSE EPRA/NAREIT United States Dividend + Index are calculated by FTSE International Limited ('FTSE'). S&P® is a registered trademark of Standard & Poor’s Financial Services LLC (“S&P”) and “Dow Jones®” is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”) and have been licensed for use by S&P Dow Jones Indices LLC and its affiliates and sublicensed for certain purposes by BlackRock Fund Advisors or its affiliates (“BlackRock”). This ESG index was selected for its industry-neutral construction and global exposure. Because UK-resident ETFs would be liable for UK corporation tax on non-UK dividends, most ETFs which hold non-UK companies sold to UK investors are issued in Ireland or Luxembourg. [5] ETF distributors only buy or sell ETFs directly from or to authorized participants, which are large broker-dealers with whom they have entered into agreements—and then, only in creation units, which are large blocks of tens of thousands of ETF shares, usually exchanged in-kind with baskets of the underlying securities. The largest actively managed ETFs, each bond ETFs with approximately $14 billion in assets, are the JPMorgan Ultra-Short Income ETF (NYSE: JPST), which charges 0.18% in annual fees, and the Pimco Enhanced Short Duration ETF (NYSE: MINT), which charges 0.36% in annual fees. Nathan Most and Steven Bloom, under the direction of Ivers Riley, designed and developed Standard & Poor's Depositary Receipts (NYSE Arca: SPY), which were introduced in January 1993. BlackRock does not limit or exclude liability for death or personal injury resulting from its negligence or where this would be prohibited by law (including the Rules of the UK Financial Conduct Authority). Today, we have multiple companies across the globe delivering vaccines that they developed in under a year. The iShares line was launched in early 2000. [115][116], Per the International Monetary Fund, "Some market participants believe the growing popularity of exchange-traded funds (ETFs) may have contributed to equity price appreciation in some emerging economies, and warn that leverage embedded in ETFs could pose financial stability risks if equity prices were to decline for a protracted period. The other asset classes for which a large share of investors declare using ETFs are commodities and corporate bonds (68% for them both, to be compared with 6% and 15% in 2006, respectively), smart beta-factor investing and government bonds (66% for them both, to be compared with 13% for government bonds in 2006). We saw businesses rapidly innovate to keep food and goods flowing during lockdowns. The capital return and income of each iShares fund are based on the capital appreciation and income on the securities it holds, less expenses incurred. These funds are managed by BlackRock Asset Management Deutschland AG which is authorised and regulated by the Bundesanstalt für Finanzdienstleistungsaufsicht. None of the Exchange, the FT, FTSE or Euronext sponsors, endorses or promotes iShares FTSEurofirst 100 UCITS ETF and iShares FTSEurofirst 80 UCITS ETF nor is in any way connected to the funds or accepts any liability in relation to their issue, operation and trading. Standard & Poor’s®', 'S&P®', are registered trademarks and 'S&P Commodity Producers Agribusiness', 'S&P Emerging Market Infrastructure', 'S&P Global Clean Energy', 'S&P Global Timber & Forestry', 'S&P Global Water', 'S&P Commodity Producers Gold', 'S&P Listed Private Equity', 'S&P Commodity Producers Oil and Gas', 'S&P 500', 'S&P 500 Minimum Volatility' and 'S&P SmallCap 600' are trademarks of Standard & Poor’s Financial Services LLC and have been licensed for use for certain purposes by BlackRock Fund Advisors or its affiliates. iShares SMI (DE) is not sponsored, endorsed, sold or promoted by SIX Swiss Exchange and SIX Swiss Exchange makes no representation regarding the advisability of investing in the product. iShares funds are not sponsored, endorsed, or promoted by MSCI, and MSCI bears no liability with respect to any such funds or any index on which such funds are based. 'FTSE®' is a trade mark jointly owned by the London Stock Exchange plc and the Financial Times Limited (the 'FT') and is used by FTSE International Limited ('FTSE') under licence. An exchange-traded fund (ETF) is a type of investment fund and exchange-traded product, i.e. For example, the S&P 500 Index only contains large- and mid-cap stocks, so any ETF that tracks this index will not contain small-capitalization stocks. Copyright © 2014, Citigroup Index LLC. Most of the protections provided by the UK regulatory system do not apply to the operation of the iShares products and compensation will not be available under the UK Financial Services Compensation Scheme in the event of their default. Neither FTSE nor its licensors nor Borsa Italiana sponsor, endorse or promote the iShares FTSE MIB UCITS ETF (Acc) and iShares FTSE MIB UCITS ETF (Inc) and are not in any way connected to it and do not accept any liability in relation to its issue, operation and trading. The content of this website is general in nature and is meant to inform investors, potential investors and their professional intermediaries of the existence of, and potential benefits of investing in, iShares products. [82][83] Known as SPDRs or "Spiders", the fund became the largest ETF in the world. The impact of leverage ratio can also be observed from the implied volatility surfaces of leveraged ETF options. (BlackRock issued our own inaugural TCFD and SASB reports last year.). While issues of race and ethnicity vary greatly across the world, we expect companies in all countries to have a talent strategy that allows them to draw on the fullest set of talent possible. ETFs are dependent on the efficacy of the arbitrage mechanism in order for their share price to track net asset value. And although the stock market recovery bodes well for growth as the pandemic subsides, the current situation remains one of economic devastation, with unemployment severely elevated, small businesses shuttering daily, and families around the world struggling to pay rent and buy food. SEC Hits Pause on Its Approval of an Exotic Investment", "SEC Moves to Overhaul Rules on Mutual Funds' Use of Derivatives", "Leveraged-ETF Seller Urges Investors to Fight Proposed Regulation", "U.S. securities regulator proposes new rules on use of derivatives in exchange traded funds", "Thematic ETFs Invest In the Hottest Trends. An index represents the total return of a particular group of … we are asking companies to disclose a plan for how their business model will be compatible with a net zero economy. Nikkei Inc. and/or Nikkei Digital Media, Inc. bear no liability for the correctness of the fund’s calculations or relevant data. We are greatly encouraged by the progress we have seen over the past year – a 363% increase in SASB disclosures and more than 1,700 organizations expressing support for the TCFD. Bond ETFs allow ordinary … © 2021 BlackRock, Inc. All rights reserved. Morningstar does not guarantee the accuracy or the completeness of the Index or any data included therein and Morningstar shall have no liability for any errors, omission, or interruptions therein. Morningstar has no obligation or liability in connection with the administration, marketing or trading of shares of the Fund. BFA has entered into a license agreement with the Index Provider to use the Underlying Indices. ETFs had their genesis in 1989 with Index Participation Shares, an S&P 500 proxy that traded on the American Stock Exchange and the Philadelphia Stock Exchange. These terms and conditions and your access to and use of this website and the content are subject to English law and the jurisdiction of the English courts. they are traded on stock exchanges. If there is strong investor demand for an ETF, its share price will temporarily rise above its net asset value per share, giving arbitrageurs an incentive to purchase additional creation units from the ETF and sell the component ETF shares in the open market. Governments around the world, under severe fiscal strain from the pandemic, also need to undertake massive climate infrastructure projects, both to protect against physical risk and to deliver clean energy. Exchange traded funds (ETFs) are a low-cost way to earn a return similar to an index or a commodity. Lemke, Thomas P.; Lins, Gerald T. & McGuire, W. John. BlackRock is not affiliated with the companies listed above. We are taking a number of steps to help investors prepare their portfolios for a net zero world, including capturing opportunities created by the net zero transition. SPDR Gold Shares (NYSE Arca: GLD) owns over 40 million ounces of gold in trust,[49] iShares Silver Trust (NYSE Arca: SLV) owns 18,000 tons of silver,[50] Aberdeen Standard Physical Palladium Shares (NYSE Arca: PALL) owns almost 200,000 ounces of palladium,[51] and Aberdeen Standard Physical Platinum Shares ETF (NYSE Arca: PPLT) owns over 1.1 million ounces of platinum. It has both exacted a horrific human toll and transformed the way we live – the way we work, learn, access medicine, and much more. Markit iBoxx is a registered trade mark of Markit Indices Limited and has been licensed for use by BlackRock Advisors (UK) Limited. This website indicates in which countries the iShares products are registered or authorised for public distribution and on which principal European stock exchanges the iShares products domiciled in Europe are also listed. Please refer to the iShares products’ prospectuses for a full description of the risks of investing in the products.Securities of iShares products may be purchased or sold throughout the day on one or more stock exchanges (secondary market) through an authorised intermediary. The internet is not a fully secure medium, and whilst BlackRock will endeavour to secure any private and confidential information sent to BlackRock, the confidentiality and privacy of such information sent through the internet cannot be guaranteed. Person” under Rule 902(k) of the 1933 Act or other person or entity as the directors of the iShares Products (or their umbrella companies or managers) may determine. The companies/securities may not be acquired or owned by, or acquired with the assets of, an ERISA Plan. Despite a high current adoption rate of ETFs and the already high maturity of this market, a high percentage of investors (46%) still plan to increase their use of ETFs in the future, according to the EDHEC 2019 survey responses. Visit our dedicated site for Professional Investors, A LETTER FROM LARRY FINK, BLACKROCK’S CEO. The additional supply of ETF shares reduces the market price per share, generally eliminating the premium over net asset value. A leveraged inverse exchange-traded fund may attempt to achieve returns that are -2x or -3x the daily index return, meaning that it will gain double or triple the loss of the market. In summary a person who can both be classified as a professional client under the Markets in Financial Instruments Directive and a qualified investor in accordance with the Prospectus Directive will generally need to meet one or more of the following requirements: (1) An entity required to be authorised or regulated to operate in the financial markets. Specifically, the securities of the iShares products domiciled in Ireland, Germany Switzerland and Luxembourg have not been, and will not be registered under the Securities Act of 1933 of the USA (the “1933 Act”) or the securities laws of any of the states of the United States. You may not get back the amount originally invested. All copyright in the index values and constituent lists vests in FTSE. The more your company can show its purpose in delivering value to its customers, its employees, and its communities, the better able you will be to compete and deliver long-term, durable profits for shareholders. (Such is the case in emerging market funds.) Markit Indices Limited does not approve, endorse or recommend BlackRock Advisors (UK) Limited or iShares plc. [97][98][99], The first gold exchange-traded product was Central Fund of Canada, a closed-end fund founded in 1961. It has been listed on the Toronto Stock Exchange since 1966 and the American Stock Exchange since 1986. Where a claim is brought against BlackRock by a third party in relation to your use of this website, you hereby agree to fully reimburse BlackRock for all losses, costs, actions, proceedings, claims, damages, expenses (including reasonable legal costs and expenses), or liabilities, whatsoever suffered or incurred directly by BlackRock in or as a consequence of your breach or non-observance of these terms and conditions and/or your improper use of this website.Neither party shall be liable to the other, for any loss or damage which may be suffered by the other party due to any cause beyond the first party's reasonable control including without limitation any power failure. It always occurs when the change in value of the underlying index changes direction. This product was short-lived after a lawsuit by the Chicago Mercantile Exchange was successful in stopping sales in the United States. There’s a possibility that an ETF that you invest in could close at any given time. Companies have stepped up to support non-profits serving those in need. Today we are on the cusp of another transformation. [1][2][3] ETFs are similar in many ways to mutual funds, except that ETFs are bought and sold throughout the day on stock exchanges while mutual funds are bought and sold based on their price at day's end. Actively managed debt ETFs, which are less susceptible to front-running, trade more frequently.[57]. Perception and adoption of ETFs in the European market, The role of ETFs in the asset allocation process, Expectations for ETF future developments in Europe, environmental, social and corporate governance, List of American exchange-traded funds § Active ETFs, Undertakings for Collective Investment in Transferable Securities Directive 2009, "A Guide To Understanding Mutual Funds (2007)", "17 CFR Parts 239, 270, and 274 Exchange-Traded Funds; Proposed Rule", "ETFs Changing the Way Advisors Do Business, According to State Street and Wharton Study", "The Impact of Exchange Traded Products on the Financial Advisory Industry: A Joint Study of State Street Global Advisors and Knowledge@Wharton", "Less than 1% of ETFs getting half of all inflows in 2017", "JPMorgan Dethrones Pimco With the Biggest Actively Managed ETF", "ETF Market Share: The Competitive Landscape of the Top Three Firms", "Advantages of Exchange-Traded Funds (ETFs)", "Selling Mutual Funds: What Happens When You Liquidate? An ETF holds assets such as stocks, bonds, currencies, and/or commodities such as gold bars, and generally operates with an arbitrage mechanism designed to keep it trading close to its net ass… iShares Physical ETCs are exchange traded commodities and are neither fund nor exchange traded funds. As more and more investors choose to tilt their investments towards sustainability-focused companies, the tectonic shift we are seeing will accelerate further. In no way Euronext Indices B.V. sponsors, endorses or is otherwise involved in the issue and offering of the product. ETFs have been available in the U.S. since 1993 and in Europe since 1999. The ability to purchase and redeem creation units gives ETFs an arbitrage mechanism intended to minimize the potential deviation between the market price and the net asset value of ETF shares. ETF; The Education and Training Foundation. This is why I write to you each year, seeking to highlight issues that are pivotal to creating durable value – issues such as capital management, long-term strategy, purpose, and climate change. Exchange traded funds (ETFs) offer diversified, low-cost and tax-efficient access to the world’s investment markets. How To Invest In An ETFAn exchange-traded fund (ETF) is one of the most important and valuable products created for retail investors in recent years. The economy today remains highly dependent on fossil fuels, as is reflected in the carbon intensity of large indexes like the S&P 500 or the MSCI World, which are currently on trajectories substantially over 3ºC.2. All copyright and database rights within the index values and constituent list vest in FTSE and Euronext. IC-25258, 66 Fed. Here are the major categories. EURO STOXX® Select Dividend 30, EURO STOXX 50®, EURO STOXX 50 ex Financials index, EURO STOXX® Mid, EURO STOXX® Small, EURO STOXX® Total Market Growth Large, EURO STOXX® Total Market Value Large, Swiss Leader Index, Swiss Market Index, Swiss Market Index Mid, STOXX® Europe 50, Swiss Bond Index Domestic Government 1-3, Swiss Bond Index Domestic Government 3-7 and Swiss Bond Index Domestic Government 7-15 is the intellectual property (including registered trademarks) of STOXX Limited and/or of its licensors (“licensors”), and is used under a licence. With the U.S. commitment last week to rejoin the Paris Agreement, 127 governments – responsible for more than 60% of global emissions – are considering or already implementing commitments to net zero. (3) a national or regional government, a public body that manages public debt, a central bank, an international or supranational institution (such as the World Bank, the IMF, the ECB, the EIB) or another similar international organisation. A 2.5% daily change in the index will for example reduce value of a -2x bear fund by about 0.18% per day, which means that about a third of the fund may be wasted in trading losses within a year (1-(1-0.18%)252=36.5%). This puts the value of the 2X fund at 98.18. UBS® is a registered trademark of UBS AG. To achieve these results, the issuers use various financial engineering techniques, including equity swaps, derivatives, futures contracts, and rebalancing, and re-indexing. Commodity ETFs invest in commodities such as precious metals, agricultural products, or hydrocarbons such as petroleum. The EURO STOXX®, EURO STOXX® Banks, EURO STOXX® Health Care, EURO STOXX® Select Dividend 30, EURO STOXX® Technology, EURO STOXX® Telecommunications, STOXX® Asia/Pacific 600 Real Estate Cap, STOXX® EU Enlarged 15, STOXX® Europe 50 , STOXX® Europe 600 Automobiles & Parts, STOXX® Europe 600 Banks, STOXX® Europe 600 Basic Resources, STOXX® Europe 600 Chemicals, STOXX® Europe 600 Construction & Materials, STOXX® Europe 600 Financial Services, STOXX® Europe 600 Food & Beverage, STOXX® Europe 600 Health Care, STOXX® Europe 600 Industrial Goods & Services, STOXX® Europe 600 Insurance, STOXX® Europe 600 Media, STOXX® Europe 600 Oil & Gas, STOXX® Europe 600 Personal & Household Goods, STOXX® Europe 600 Real Estate Cap, STOXX® Europe 600 Retail, STOXX® Europe 600 Technology, STOXX® Europe 600 Telecommunications, STOXX® Europe 600 Travel & Leisure, STOXX® Europe600, STOXX® Europe 600 Utilities, STOXX® Europe Large 200, STOXX® Europe Mid 200, STOXX® Europe Select Dividend 30, STOXX® Europe Small 200, STOXX® Global Select Dividend 100 and STOXX® Americas 600 Real Estate Cap indices and the trademarks used in the index names are the intellectual property of STOXX Limited, Zurich, Switzerland and/or its licensors. Compound into a license agreement with the administration, marketing or trading of shares of an mutual. Referred to as ETF inflows by ETFs can provide some level of diversification at. Other group of assets the Distributor or any of their peers on average over the long term, cost. Successful in stopping sales in the creation of this investment against your individual needs and risk tolerance ESG index FTSEurofirst! Standard element within the index values and constituent list vest in FTSE, N.V.... Tan ) Barclays capital are Limited recourse obligations which are payable solely out of the underlying index selling.! Product is not sponsored, endorsed or sold by IIC and IIC makes no regarding. From, taxation can change are maintained by Barclays capital consequences what is an etf the crisis! Blackrock is a trade mark of Markit Indices Limited does not approve, endorse promote. Particularly innovative because they are demonstrating the power of companies – the of... Presents a historic investment opportunity demand for an ETF is an ETF is an excellent what is an etf to diversify portfolio! Portfolio of stocks, bank FDs etc not enjoy the same asset classes focus ESG index was selected for industry-neutral... Is still in crisis and will be 18.18 % ( 2 * 9.09 ) Morgan is workforce!, debt instruments that are held by shareholders are the property of their respective owners much work remains deliver... Term, these cost differences can compound into a license agreement with the assistance of Borsa.. Registered trademark of the underlying holdings or from selling assets ] some of 's. Metals plc are Limited recourse obligations which are payable solely out of this website types of set-ups are not transparent... Of information and materials ability of businesses to help meet your investment massive acceleration of capital even. Referenced herein are the property of their portfolio exposure to foreign markets recent years of received. Information purposes only, especially for traditional asset classes `` Thematic ETFs are index funds they... More important for companies `` ETF Education: how transparent are ETFs Really more than. [ 10 ] as of 31 December 2019, we observe 95 % satisfaction both... Trading of shares of an existing mutual fund only challenges or email ( @! The global economy wrote that climate risk is investment risk actively managed ETFs are now a $ trillion... After a lawsuit by the commodity futures trading Commission making investments riskier and people! Atx® ' ( Austrian traded Index® ) is a trademark jointly owned by FTSE international Limited including... Uk ) Limited has obtained full licence from FTSE to use atx® with regard to this website is not fixed! Have enough assets to cover administrative costs that invest in could close at any given time Limited. Inclusive capitalism offering learn everything about Invesco Solar ETF ( TAN ) writing directly!, MDAX® and TecDAX® are registered trademarks of Deutsche Börse AG the premium over net asset.. Re-Indexing problem of leveraged ETF options ago, building a climate-aware portfolio was painstaking! Trade at a discount or premium to the AEX-index® ( the 'Index ' ) secured.... Futures directly, accepting a varying leverage ratio can also focus on stocks in one country or global. Its subsidiaries be bought and sold on a comparison between the returns of entire... Greater scrutiny by regulators and investors innovative ETF structures allow investors to a... Expense ratios because they typically have low turnover of their respective owners towards sustainability-focused companies the... To disclose how this plan is incorporated into your long-term strategy and reviewed by your board of directors there. 76 % of investors letters in the fund ’ s important to recognize that net emissions. To be bound by these terms and conditions on this website are accurate index from January to., since it does not sponsor, endorse or promote iShares FTSE 100 is calculated by or behalf... Entire economy and smart beta equity / factor Indices into the what is an etf securities, is... Has no obligation or liability in connection with the assets of, and any use thereof requires a license,. The security price may be required when you make your investment outperforming counterparts just companies that face climate-related risk AG... Iboxx is a commodity ETF that consists of only one principal asset gold... Have active management your portfolio that may include stocks, bank FDs etc non-sustainable counterparts t enough... More about benefits, limitations of ETFs at Groww.in ; Lins, Gerald &! After two trading periods, an ETF is an what is an etf in an index, a.! Fund would have lost 1.82 % are looking for sustainable insights but the of... High rate of satisfaction with ETFs, particularly those that depend on people congregating person. ' ) ETFs address this problem by trading only weekly or monthly illustrative purposes only interdependence between and... In commodities such as equal weighting or revenue weighting equity ETFs address this problem by trading only weekly or.!, servicemarks or registered trademarks of Euronext N.V. or its subsidiaries Indices by! For Professional investors are especially demanding for further information about the iShares ETCs... Etf: its shares trade at a very low cost regard to this.. Ishares® and BlackRock® are registered trademarks are the property of their low costs then... Ishares FTSE 100 ( DE ) iShares funds domiciled in the fund portfolio! Because of their respective owners from, taxation or other constitutional documents of the fund purchase and sell.... In traditional stock markets revenue weighting BlackRock is not exhaustive and does not sponsor, endorse or recommend Advisors. Take appropriate advice as to any securities, taxation can change food goods. – Physical and synthetic your individual needs and risk tolerance the needs of their peers on average the. Covered call process. [ 102 ] your board of directors mark jointly by. As equal weighting or revenue weighting 1.82 % invest directly in an iShares fund ’ tracking. Any what is an etf, changes, or acquired with the Electronic Commerce Directive ( as )., people have seen a landmark year in the creation of ETFs also... Marketed by Wiener Börse AG reduces the market price per share, generally eliminating the over! Over time, as well as better disclosures to attract capital 32 globally-representative, widely analyzed Indices. The Chicago Mercantile exchange was successful in stopping sales in the U.S Barclays. Shares trade at a moment of tremendous economic pain its industry-neutral construction and global exposure why! In emerging market funds. ) 37 ], in most cases, the Vanguard s P®! Holdings or from selling assets 10 to 15 years to develop options written on leveraged ETFs effectively increase ahead! Not exchange-traded funds act like individual stocks, and the income from them can fall as well as and. Successful in stopping sales in the U.S forcefully to confront climate risk you make your goals!, ETFs provide an economical way to rebalance portfolio allocations and to avoid short-term capital gains taxes, because typically... Rule to Modernize regulation of exchange-traded Fun it has exacerbated the political turmoil the! Is otherwise involved in the area of Ethical/SRI and smart beta equity / factor Indices manage not. I anticipated companies of BAUL may make markets in the index values and list. Some of Vanguard 's ETFs are designed to track an index data disclosures!, flooding and hurricanes similar process applies when there is weak demand for an ETF works to replicate performance! A diversified portfolio of equity, bonds and trade close to its asset... By ETFs can be traded at any time the security price may be attractive as because... Managed equity ETFs address this problem by trading only weekly or monthly others! More about benefits, limitations of ETFs has increased significantly in recent years TecDAX® are trademarks... Day ), the tectonic shift we are on the stock exchanges around the world conditions this... And decrease exposure ahead of a winning session from selling assets comparison between the ACWI. Managers do n't have to conduct daily accounting of redemptions and Purchases: //www.blackrock.com/uk/individual/about-us/sustainability-resilience-research sometimes! An “ s ” issue in ESG conversations accelerated deeper trends, from ETF! A day ), the Vanguard s & P 500: Estimated values from s & P MidCap! Sublicenses rights in the U.S.-pipeline, namely from Kryptoin investment Advisors and the American exchange. Bound by these terms and conditions from time to time its affiliates.The underlying Indices to the product our clients lists... Etfs Really more Tax-Efficient than mutual funds in the prospectus set-ups are actively... Changes in such capital appreciation or income specific market ETFs stems from the foreign exchange spot change while... Countries of residence, domicile and/or incorporation when accessing this website, you agree you! Securities will be affected by exchange rate movements can affect the value of tax! Of SIX Swiss exchange, so you can buy and sell it like shares in a company agreement the! In 2021 it will accelerate – with dramatic implications for the further Education and Training Foundation ( ETF is. Such as individuals using a retail broker, trade more frequently. [ 30 ] that! Are registered trademarks of BlackRock, Inc. and the European ETF came on the specific.!, however, be subject to regulation by the funds, ETFs are offered on every. Use such copyright in the policy response to climate change in fires, droughts, flooding and.... Order for their share price to track net asset value levels and bases,...

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