A smart beta exchange traded fund, the iShares Core Conservative Allocation ETF (AOK) debuted on 11/04/2008, and offers 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.
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.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $468.79 M, this makes it one of the largest ETFs in the Total Portfolio ETFs. AOK is managed by Blackrock. 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for AOK are 0.25%, which makes it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 2.20%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Ishares Core Total Usd Bond Market (IUSB) accounts for about 59.19% of total assets, followed by Ishares Core S&p 500 Etf (IVV) and Ishares Core Msci Int Devel Etf (IDEV).
Its top 10 holdings account for approximately 99.98% of AOK's total assets under management.
Performance and Risk
The ETF has lost about -0.42% so far this year and is up about 1.70% in the last one year (as of 09/10/2018). In the past 52-week period, it has traded between $33.73 and $35.24.
The ETF has a beta of 0.31 and standard deviation of 4.37% 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.
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ISHARS-CN AL (AOK): 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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