Should iShares S&P 100 ETF (OEF) Be on Your Investing Radar?

Looking for broad exposure to the Large Cap Blend segment of the US equity market? You should consider the iShares S&P 100 ETF (OEF), a passively managed exchange traded fund launched on 10/23/2000.

The fund is sponsored by Blackrock. It has amassed assets over $ 7.57 billion, making it one of the largest ETFs attempting to match the Large Cap Blend segment of the US equity market.

Why Large Cap Blend

Large cap companies usually have a market capitalization above $ 10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.

Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.

Costs

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.

Annual operating expenses for this ETF are 0.20%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 1.32%.

Sector Exposure and Top Holdings

It is important to delve into an ETF’s holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Information Technology sector – about 32.40% of the portfolio. Healthcare and Consumer Discretionary round out the top three.

Looking at individual holdings, Apple Inc (AAPL) accounts for about 10.45% of total assets, followed by Microsoft Corp (MSFT) and Amazon Com Inc (AMZN).

The top 10 holdings account for about 41.88% of total assets under management.

Performance and Risk

OEF seeks to match the performance of the S&P 100 Index before fees and expenses. The S&P 100 Index measures the performance of the large-capitalization sector of the US equity market. It is a subset of the S&P 500 and consists of blue chip stocks from diverse industries in the S&P 500 with exchange listed options & the Index represented approximately 45% of the market capitalization of listed US equities.

The ETF has lost about -19.11% so far this year and is down about -1.63% in the last one year (as of 05/13/2022). In the past 52-week period, it has traded between $ 178.67 and $ 221.63.

The ETF has a beta of 0.99 and standard deviation of 23.54% for the trailing three-year period, making it a medium risk choice in space. With about 105 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares S&P 100 ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, OEF is an outstanding option for investors seeking exposure to the Style Box – Large Cap Blend segment of the market. There are other additional ETFs in the space that investors could consider as well.

The iShares Core S&P 500 ETF (IVV) and the SPDR S&P 500 ETF (SPY) track a similar index. While iShares Core S&P 500 ETF has $ 278.78 billion in assets, SPDR S&P 500 ETF has $ 355.91 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.

Bottom-Line

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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