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The Good, Bad & Ugly Of The IOO ETF

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.

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).

From 200+ ETFs in Australia, our top investment analyst has just identified his #1 ETF for 2021 and beyond.

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From 200+ ETFs in Australia, our top investment analyst has just identified his #1 ETF for 2021 and beyond.

Low fees? Check.

Long-term growth potential? Check.

Regular cash returns? Check!

This ETF makes investing in ETFs "Super-Easy".

Simply click here to access the full ETF report, ticker code, and step-by-step investment guide. Our expert's #1 ETF report is completely free.

No gimmicks, no payment, no credit card info. Just click the link below and enter your email address. We'll send you the report right away.

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