Is iShares Core Aggressive Allocation ETF (AOA) a Hot ETF Right Now?

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The iShares Core Aggressive Allocation ETF (AOA) was launched on 11/04/2008, and is a smart beta exchange traded fund designed to offer broad exposure to the Total Portfolio ETFs category of the U.S. equity market.

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.

Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.

There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.

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.

Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.

Fund Sponsor & Index

The fund is sponsored by Blackrock. It has amassed assets over $870.97 M, making it the largest ETF in the Total Portfolio ETFs. Before fees and expenses, AOA seeks to match the performance of the S&P Target Risk Aggressive Index.

The S&P Target Risk Aggressive Index seeks to measure the performance of an asset allocation strategy targeted to an aggressive risk profile.

Cost & Other Expenses

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

Operating expenses on an annual basis are 0.25% for this ETF, which makes it the least expensive product in the space.

It has a 12-month trailing dividend yield of 1.79%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

When you look at individual holdings, Ishares Core S&p 500 Etf (IVV) accounts for about 36.77% of the fund's total assets, followed by Ishares Core Msci Int Devel Etf (IDEV) and Ishares Core Total Usd Bond Market (IUSB).

Its top 10 holdings account for approximately 100% of AOA's total assets under management.

Performance and Risk

So far this year, the ETF has added roughly 0.37%, and is up about 6.57% in the last one year (as of 05/31/2018). AOA has traded between $51.09 and $56.92 in the past 52-week period.

The fund has a beta of 0.79 and standard deviation of 10.90% for the trailing three-year period. With about 9 holdings, it has more concentrated exposure than peers.

Bottom Line

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.

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ISHARS-AG AL (AOA): ETF Research Reports
ISHARS-SP500 (IVV): ETF Research Reports
ISHARS-CORE TB (IUSB): ETF Research Reports
ISHR-CRMS D MKT (IDEV): ETF Research Reports
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