AOR: A Balanced Portfolio But Not Growth Oriented

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PM Images ETF Overview iShares Core Growth Allocation ETF (NYSEARCA:AOR) has a balanced portfolio of funds that include fixed income, U.S. and international equity funds. AOR has underperformed the S&...

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AOR has underperformed the S&...</p>\n\n<a href=\"https://seekingalpha.com/article/4698502-aor-etf-balanced-portfolio-but-not-growth-oriented\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"IVV.AU","symbol_name":"ISHARES S&P 500 ETF/AUS","start_time":0,"source_url":"https://seekingalpha.com/article/4698502-aor-etf-balanced-portfolio-but-not-growth-oriented","article_id":"2442881338","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1405638904/image_1405638904.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2442881338","pubTimestamp":1718075224,"sourceInfo":{"source_id":"seekingalpha_fund","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"PM Images ETF Overview iShares Core Growth Allocation ETF (NYSEARCA:AOR) has a balanced portfolio of funds that include fixed income, U.S. and international equity funds. 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AOR has underperformed the S&P 500 index in the past, as the fund itself is not as growth-oriented as its full name suggests. Fortunately, the fund has less downside risk than the S&P 500 index due to its exposure to fixed income. This fund is suitable for investors that desire safety over performance. However, investors with a long-term investment horizon that desire higher performance than the S&P 500 index should seek other funds instead. YCharts Fund Analysis AOR's fund price has yet to reach the peak set in late 2021 Like most other funds, AOR has performed well since the market reached the cyclical bottom in October 2022. Since the low, AOR has delivered a total return of about 30.9%. However, it has yet to surpass its price peak reached in late 2021. Its current share price of $55.88 is still below the peak fund price of $57.68 per share reached in November 2021. In contrast, the S&P 500 index has already surpassed the peak reached in late 2021 and early 2022. In addition, the S&P 500 index delivered a total return of 53.2% since the low reached in October 2022. This return is much higher than AOR's total return of 30.9%. YCharts AOR has a balanced portfolio of fixed income and equity funds AOR basically follows a 60/40 strategy in its portfolio composition, that is, 60% of its portfolio will focus on equities, and 40% on fixed income. The table below shows the composition of AOR. As can be seen, the fund contains two fixed income funds: iShares Core Total USD Bond Market ETF (IUSB) which consists about 33.2% of the portfolio, and iShares Core International Aggregate Bond ETF (IAGG) which consists about 5.8% of the portfolio. These two funds consist of nearly 40% of the total portfolio. IUSB focuses on US dollar bonds, while IAGG focuses on international bonds. AOR's largest equity position is iShares Core S&P 500 ETF (IVV). IVV, which tracks the S&P 500 index, represents slightly over one third of the total portfolio (34.2%). The second-largest equity fund in AOR's portfolio is iShares Core MSCI International Developed Markets ETF (IDEV), which accounts for about 17.5% of the total portfolio. This is followed by iShares Core MSCI Emerging Markets ETF (IEMG), which accounts for about 6.1%. Together, international equities represent about 23.5% of the total portfolio, slightly less than one quarter of the portfolio. AOR also allocates about 3% towards mid-cap and small-cap equities. iShares Not growth-oriented Although the full name of AOR suggests that it is focused on growth, AOR is not a growth-oriented fund. AOR has a balanced portfolio that offers exposures to equity and fixed income, U.S. and international equities, and large-cap, mid-cap, and small-cap stocks. However, none of the funds that it holds emphasize on growth. For example, both IDEV and IEMG are funds that have a combination of growth and value stocks. IVV is slightly better as it has a slight tilt towards growth, but the index which it tracks is a broader market index (S&P 500). Therefore, it cannot be identified as a growth fund. In our opinion, iShares S&P 500 Growth ETF (IVW) is much more growth oriented than IVV. The chart below shows the fund style of equities in AOR's portfolio. Given that AOR also includes fixed income funds, which generally underperform equity funds, its total returns in the long run will likely be inferior to other growth funds. As can be seen from the chart below, AOR significantly underperformed IVW and iShares S&P Mid-Cap 400 Growth ETF (IJK) in the past 10 years. YCharts AOR will likely also underperform the S&P 500 index in the long run Below is a chart that compares the total return of 7 funds within AOR's portfolio since 2016. As can be seen from the chart, the best performance fund is IVV, which tracks the S&P 500 index. IVV has delivered a total return of 158.3%. The second and third-best performance funds in AOR's portfolio are iShares Core S&P Mid-Cap ETF (IJH) and iShares Core S&P Small-Cap ETF (IJR). These two funds are U.S. equity funds that focus on mid-cap and small-cap stocks, respectively. IJH and IJR delivered total returns of 93.5% and 75.7%, respectively. The worst performance funds are iShares Core International Aggregate Bond ETF (IAGG) and iShares Core Total USD Bond Market ETF (IUSB). Both funds are fixed income funds, and their fund prices have declined in the past 2 years due to tightening monetary policies around the world. IAGG and IUSB have only delivered total returns of 13.9% and 9.3%, respectively. From the chart, we observed several trends. First, U.S. equities have usually performed better than international equities in the long run. Second, Large-cap stocks usually performed better than mid-cap and small-cap funds. Third, equity funds typically performed better than fixed income funds in the long run. Therefore, the best fund to own from these 7 funds is IVV, which is a U.S. large-cap equity fund. Since AOR's exposure to IVV is only one third of its portfolio, it is likely that AOR's total long-term return will be inferior to IVV's, which tracks the S&P 500 index. YCharts Lower downside risk Although AOR will likely produce inferior long-term returns than the S&P 500 index, the fund still has an important advantage, that is, AOR has lower downside risk than the broader market. This is because about 40% of its portfolio belongs to fixed income funds. As can be seen from the chart below, most of the bonds in AOR's portfolio belong to investment grade bonds. In addition, majority of the bonds have effective duration years less than 5 years. In other words, these bonds have low interest rate and credit risks. Therefore, we think AOR's fund price will be less volatile than the broader market. Morningstar Below is a chart that shows how AOR and the S&P 500 index will perform in market turmoil. As can be seen from the chart, AOR typically has lower downside risk than the S&P 500 index. We can see this trend in the pullbacks that happened in 2016 and 2019, and also in the recession in 2020 caused by COVID-19. YCharts Investor Takeaway  AOR appears to have lower downside risk than the broader market. Therefore, it may be suitable for investors that desire less risk. However, its balanced and diversified approach means that its total return will likely be inferior to the S&P 500 index in the long run. Therefore, we see little point of owning AOR, especially if the goal is to outperform the S&P 500 index in the long run. Investors with a long-term investment horizon should consider other funds instead.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":1,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2442881338"}