Understanding the ISHARES CORE 60/40 BALANCED ALLOCATION ETF (AOR)

What this ETF is trying to do

The ISHARES CORE 60/40 BALANCED ALLOCATION ETF, known by its ticker symbol AOR, is an exchange-traded fund (ETF). While the specific holdings are not listed in this report, the name suggests it aims to provide a "balanced" mix of different types of investments.

What the numbers show

When looking at an ETF, it is important to understand two different types of returns: price return and total return.

• Price Return: This measures only how much the share price has changed.

• Total Return: This includes both the change in share price AND any cash distributions (dividends) paid out to investors.

For AOR, the numbers show:

• Year-to-Date (YTD): The price return is approximately 5.89%, while the total return is higher at approximately 7.69%.

• One Year: The price return was approximately 6.84%, and the total return was approximately 9.78%.

• Three Years: The price return was approximately 40.00%, and the total return was approximately 51.61%.

To visualize the price change, we can look at an estimated price from roughly one year ago. The estimated price was $64.43, and the current price is $68.84.

Income and distribution explanation

Some investors look for ETFs that pay out cash, known as distributions. AOR has a distribution yield of approximately 2.64%. This means the cash paid out is about 2.64% of the ETF's price. Over the last 12 months, the trailing distributions were $1.815 per share. These payments usually happen quarterly, and in the last year, there were 4 payouts.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in an ETF steadily loses value. It is important to note that a falling share price does not always mean NAV erosion is happening. In the case of AOR, the erosion-risk score is 100, and the label states "No price erosion detected." There is no severe erosion-risk flag for this ETF.

Pros

• The total return is higher than the price return, meaning distributions have added value to the overall performance.

• The erosion-risk measurement is rated as "good."

Cons

• The distribution yield (2.64%) is a measurement of cash flow and does not guarantee that the share price will stay the same or grow.

Beginner takeaway

When studying AOR, remember that price returns and total returns tell different stories. The price return only shows the movement of the share price, while the total return shows how much you actually earned including cash payments. Always look at both to get a full picture of how an ETF has performed.