Designed to provide broad exposure to the Total Portfolio ETFs category of the U.S. equity market, the iShares Core Conservative Allocation ETF (AOK - Free Report) is a smart beta exchange traded fund launched on 11/04/2008.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
AOK is managed by Blackrock, and this fund has amassed over $470.86 M, which makes it the largest ETF in the Total Portfolio ETFs. Before fees and expenses, this particular fund seeks to match the performance of the S&P Target Risk Conservative Index.
The S&P Target Risk Conservative Index seeks to measure the performance of an asset allocation strategy targeted to a conservative risk profile.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for AOK are 0.25%, which makes it the least expensive product in the space.
It has a 12-month trailing dividend yield of 2.08%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
When you look at individual holdings, Ishares Core Total Usd Bond Market (IUSB - Free Report) accounts for about 59.41% of the fund's total assets, followed by Ishares Core S&p 500 Etf (IVV - Free Report) and Ishares Core Msci Int Devel Etf (IDEV - Free Report) .
The top 10 holdings account for about 100% of total assets under management.
Performance and Risk
The fund's year-to-date return has lost about -0.77%, and was up about 3.13% in the last one year (as of 06/06/2018). AOK has traded between $33.64 and $35.24 in the past 52-week period.
The ETF has a beta of 0.32 and standard deviation of 4.57% for the trailing three-year period. With about 9 holdings, it has more concentrated exposure than peers.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.