Making its debut on 04/03/2012, smart beta exchange traded fund iShares Morningstar Multi-Asset Income ETF (IYLD) provides investors 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by Blackrock, and has been able to amass over $325.29 M, which makes it one of the larger ETFs in the Total Portfolio ETFs. Before fees and expenses, IYLD seeks to match the performance of the Morningstar Multi-Asset High Income Index.
The Morningstar Multi-Asset High Income Index is broadly diversified and seeks to deliver high current income while maintaining long-term capital appreciation.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for IYLD are 0.59%, which makes it on par with most peer products in the space.
IYLD's 12-month trailing dividend yield is 4.90%.
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 Iboxx High Yield Corp Bond (HYG) accounts for about 19.96% of the fund's total assets, followed by Ishares Mbs Etf (MBB) and Ishares Jpmorgan Usd Emerging Mark (EMB).
The top 10 holdings account for about 99.4% of total assets under management.
Performance and Risk
So far this year, the ETF has lost about -3.24%, and it's up approximately 2.32% in the last one year (as of 05/09/2018). IYLD has traded between $24.55 and $25.94 in the past 52-week period.
IYLD has a beta of 0.35 and standard deviation of 6.24% for the trailing three-year period. With about 12 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-IBX HYCB (HYG): ETF Research Reports
ISHARS-MO MA (IYLD): ETF Research Reports
ISHARS-JPM EM B (EMB): ETF Research Reports
ISHARS-MBS (MBB): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.