The iShares Global 100 ETF (ASX: IOO) offers ASX ETF investors exposure to shares in 100 of the world’s top companies.
What The iShares IOO ETF Does
The IOO ETF invests in a portfolio of shares for the largest 100 companies around the world with the objective of matching the performance of the S&P Global 100 Index.
Meaning the IOO ETF invests in shares of the largest and arguably most important companies around the world. Think companies like Microsoft Corporation (NASDAQ: MSFT), Apple Inc (NASDAQ: AAPL) and JPMorgan Chase & Co (NYSE: JPM).
IOO has a reasonably large exposure to information technology (22.03%) as well as health care (14.45%) and consumer staples (13.3%).
Over a ten-year timeframe, the IOO ETF’s returns have been 10.78% per year.
But if we go right back to 2000, which includes the GFC and the dot com crash, returns have only been 2.62% per year. You could see that as meaning the ETF is heavily exposed to downturns, or you could view it as a positive – if you hold for the long-term there’s a good chance of making a positive return even with two big market crashes.
The IOO ETF also pays semi-annual dividends with a trailing dividend yield of 1.84%.
IOO Fees & Risks
The management fee for the IOO Global 100 ETF is 0.4% per year, considerably more than, say, the iShares S&P 500 ETF (ASX: IVV) or the BetaShares Australia 200 ETF (ASX: A200).
In terms of risks, the long-term performance should make it clear that being diversified doesn’t necessarily protect you from a downturn.
Where To For IOO?
I like the strategy of the IOO ETF and I do believe a lot of the companies it holds have sustainable competitive advantages. But I also think the fees are higher than they could be and I’m not convinced long-term returns would be that different from a simple S&P 500 ETF.
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Disclosure: At the time of writing, Max owns shares in the iShares S&P 500 ETF (ASX: IVV) and the BetaShares Australia 200 ETF (ASX: A200).
