ETF Overview: iShares Core Growth Allocation ETF AOR Underperforms S&P 500 Index, Offers Safety Over Performance

New York, USA – The iShares Core Growth Allocation ETF (NYSEARCA: AOR) offers investors a balanced portfolio with a mix of fixed income and both U.S. and international equity funds. Despite its name, AOR has not performed as well as the S&P 500 index historically, as it focuses more on safety rather than high growth potential. Investors seeking stability in their investments would find AOR appealing, but those looking for greater returns may want to explore other options.

The fund’s price has yet to reach its peak from late 2021, even though it has shown positive performance since the market’s low point in October 2022. AOR’s total return has been around 30.9%, lower than the S&P 500 index, which has seen a 53.2% total return during the same period. This discrepancy underscores AOR’s emphasis on fixed income holdings, giving it a more conservative stance compared to the broader market.

AOR maintains a balanced portfolio with a 60/40 allocation in equities and fixed income. The fund includes two primary fixed income funds – iShares Core Total USD Bond Market ETF (IUSB) and iShares Core International Aggregate Bond ETF (IAGG) – which together make up nearly 40% of the total portfolio. Additionally, AOR holds equity positions in various funds, such as iShares Core S&P 500 ETF (IVV) and iShares Core MSCI International Developed Markets ETF (IDEV), reflecting a diverse investment approach.

Despite its name suggesting a focus on growth, AOR’s portfolio is not geared towards high growth investments. The fund’s mix of equities and fixed income, including large-cap, mid-cap, and small-cap stocks, promotes stability rather than aggressive growth potential. This may result in lower long-term returns compared to more growth-oriented funds in the market.

AOR’s balanced approach offers lower downside risk than the S&P 500 index, thanks to its significant exposure to fixed income securities. The fund’s investment in investment grade bonds with short effective durations indicates a lower level of volatility compared to the broader market. In times of market turmoil, AOR has shown a pattern of lower downside risk compared to the S&P 500 index, providing a level of stability for investors.

In conclusion, while AOR may appeal to investors seeking safety and lower risk, its conservative investment approach may lead to inferior long-term returns compared to the S&P 500 index. Investors with a long-term horizon looking to outperform the market may find better options elsewhere. It is essential for investors to carefully consider their goals and risk tolerance before choosing AOR or exploring other investment opportunities.