iShares MSCI EM Swap UCITS ETF: BlackRock lists emerging market swap instrument in London

The instrument, already available on Euronext Amsterdam since 27 February 2026, expands the US manager’s offering of synthetic ETFs in the emerging equity segment.

Technical data of the instrument

The ETF has ISIN code IE000S3N6R34 and trades on the London Stock Exchange with the ticker ESWP in pounds sterling. The share class is denominated in US dollars, the fund’s base currency, with the possibility of trading in different currencies on the single exchange. The total expense ratio (TER) stands at 0.14% per annum, 4 basis points lower than BlackRock’s equivalent physically replicated ETF on the same index.

The fund’s launch date is 23 February 2026, while listing on Xetra in euros is scheduled for 3 March 2026 under the ticker EPSW. The instrument is domiciled in Ireland, complies with the UCITS directive and is managed by BlackRock Asset Management Ireland Limited.

Operating structure

The fund adopts a synthetic structure based on unfunded total return swaps. The index is replicated through financial derivatives rather than through the direct purchase of the underlying securities. The fund invests in a portfolio of global developed market equities, the returns on which are paid to counterparties to fulfil the payment obligations under the swap contracts.

This configuration allows the fund to circumvent certain structural frictions typical of emerging markets, such as capital gains taxes, foreign ownership limits and rebalancing costs. The management of trading and tax aspects remains the responsibility of the swap counterparty, not the fund itself.

The benchmark index is the MSCI Emerging Markets Index (Net), which measures the performance of large and mid-cap equities in emerging markets. Weighting is based on free float-adjusted market capitalisation, with quarterly rebalancing.

Risk profile

The KIID documentation classifies the instrument with a risk level of 6 out of 7. The main risk factors include:

Counterparty risk: the insolvency of institutions providing custody services or acting as counterparties to derivatives may expose the fund to financial losses

Derivative sensitivity: derivative instruments can be highly sensitive to changes in the value of the underlying asset, amplifying gains and losses

Currency risk: units may be traded in currencies other than the base currency, with a potential impact on performance

The fund’s custodian is State Street Custodial Services (Ireland) Limited. IShares VI plc operates with segregated assets between sub-funds in accordance with Irish law.

Market context

BlackRock initially kept its distance from synthetic ETFs, with CEO Larry Fink publicly criticising this structure. The manager subsequently expanded its European range of swap-based ETFs to eight products. The launch of the MSCI ACWI and MSCI Emerging Markets ETFs responds to demand for core global and emerging market exposure with an efficient implementation approach.

In the emerging market segment, competition includes swap products from other issuers.

Operational features for investors

The shares are accumulation shares: the income generated is included in the share value rather than distributed. Trading takes place daily through intermediaries on the stock exchanges where the funds are listed. Only authorised participants, typically selected financial institutions, can trade directly with the fund.

Final considerations

The arrival of the instrument in London completes the European distribution plan for the product. The swap structure is a technical solution for institutional investors and advisors seeking exposure to emerging markets with tax and tracking efficiency.

The TER of 0.14% positions the product competitively within the segment. Its presence on three major European markets (Amsterdam, London, Frankfurt) ensures liquidity and accessibility for European clients.

Investors should assess their counterparty risk tolerance and understanding of the synthetic structure before allocation.