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Is iShares Core Conservative Allocation ETF (AOK) a Hot ETF Right Now?

Launched on 11/04/2008, the iShares Core Conservative Allocation ETF (AOK) is a smart beta exchange traded fund offering broad exposure to the Total Portfolio ETFs category of the U.S. equity 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.

But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.

Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.

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

AOK is managed by Blackrock, and this fund has amassed over $468.65 M, which makes it the largest ETF 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

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 AOK, making 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) accounts for about 57.93% of the fund's total assets, followed by Ishares Core S&p 500 Etf (IVV) and Ishares Core Msci Int Devel Etf (IDEV).

The top 10 holdings account for about 100.01% of total assets under management.

Performance and Risk

The fund's year-to-date return has lost about -1.37%, and is up about 3.87% in the last one year (as of 05/08/2018). AOK has traded between $33.58 and $35.24 in the past 52-week period.

AOK has a beta of 0.32 and standard deviation of 4.62% 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-SP500 (IVV): ETF Research Reports
ISHARS-CN AL (AOK): ETF Research Reports
ISHARS-CORE TB (IUSB): ETF Research Reports
ISHR-CRMS D MKT (IDEV): ETF Research Reports
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