Making its debut on 11/04/2008, smart beta exchange traded fund iShares Core Conservative Allocation ETF (AOK - Free Report) provides investors broad exposure to the Total Portfolio ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other 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
The fund is managed by Blackrock. AOK has been able to amass assets over $468.37 M, making it one of the largest ETFs in the Total Portfolio ETFs. AOK, before fees and expenses, 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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.25% for this ETF, which makes it one of the least expensive products in the space.
AOK's 12-month trailing dividend yield is 2.17%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many 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 59.25% 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) .
Its top 10 holdings account for approximately 100% of AOK's total assets under management.
Performance and Risk
So far this year, the ETF has lost about -0.68%, and was up about 2.62% in the last one year (as of 08/16/2018). AOK has traded between $33.73 and $35.24 in the past 52-week period.
The ETF has a beta of 0.31 and standard deviation of 4.54% 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.