iShares Core Conservative Allocation ETF (AOK)
AOK normally means All is OK. The ticker symbol AOK should be renamed ANOK for “All is not OK.” The reasons are very simple, and it only took me about two minutes to notice the following four issues:
AOK’s complexity is puzzling. It is an ETF that holds other iShares ETF’s and most of the holdings are bonds. One is IUSB and the other is IAGG. This sounds smart but is unnecessary and costly. AOK’s expense ratio is significantly higher than the expense ratios of IUSB and IAGG. Given the reality that AOK is 71% bonds, I must ask, “why not just buy IUSB and then shares of IVV?” You will wind up with essentially the same results at a far lower annual cost. Always understand holdings in an ETF or mutual fund before you buy it.
AOK’s holdings are ultra-conservative and lean far to into the bond world. I cannot think of a single reason to buy this ETF for a risk-averse investor. Bonds have risk so putting more than two-thirds of your eggs in the bond basket would cause me concern. This is a second reason to look at the holdings.
Dividend or income growth is not the path for this investment. At best the income would be turbulent and subject to changes based on interest rates. Again, this is due to the heavy bond weighting.
Total assets are low. When you see an ETF like this with total investments of slightly more than $500 million dollars (IVV has $181B invested), there is a reason that investors are not flocking to it. This fund was started in 2008 and has a very weak following.
Wallmine link to AOK: https://wallmine.com/etf/aok