ETFs that are categorized as “Multi-Asset” are sometimes ignored by the investment public and portfolio managers on both a retail and institutional level simply because Multi-Asset can be such a vague term and is likely not properly understood by most that are traditionally predisposed to equities and fixed income purely.
That said, a group of funds of rising importance in the ETF space is that of “Allocation” funds that are issued by iShares.
The iShares S&P Moderate Allocation Fund (NYSEArca: AOM) for instance is one example, and currently has an impressive $152 million in assets under management.
The fund is structured according to a proprietary managed (by S&P) target risk allocation model and seeks to track the S&P Target Risk Moderate Index.
The ETF is structured as a “Fund of Funds” ETF, in that the product owns other ETFs in some asset allocation to round out all of the holdings to 100%.
For instance, current top holdings of AOM are the following ETFs: AGG (iShares Barclays Aggregate Bond), 25.95%, IVV (iShares S&P 500 Index), 21.67%, SHV (iShares Barclays Short Treasury Bond), 19.06%, TIP (iShares Barclays TIPS Bond, 11.47%), and EFA (iShares MSCI EAFE Index), 9.24%.
Other target risk allocation funds exist as well, and they have also been growing in asset levels and name recognition as institutional and retail investors have been relatively quick to embrace these as buy and hold investments.
iShares also offers AOR (iShares S&P Growth Allocation Fund), AOA (iShares S&P Aggressive Allocation Fund), and AOK (iShares S&P Conservative Allocation Fund) to round out this allocation funds lineup for investors of varying risk tolerances and investment horizons.
Judging by the slow and steady climbing interest in both trading volume and assets under management, we would say that these “Funds of Funds” may be one of the next waves of growth and innovation in the ever changing ETF space.
iShares S&P Moderate Allocation Fund
For more information on Street One ETF research and ETF trade execution/liquidity services, contact pweisbruch@streetonefinancial.com.