BAAPX
BlackRock 80/20 Target Allocation-A
Aggressive Growth Strategy with Equity Focus
The BlackRock 80/20 Target Allocation-A (BAAPX) is designed for investors seeking aggressive growth through a high allocation to equities. As a fund-of-funds, BAAPX invests 100% of its assets in underlying funds that primarily focus on equity securities. This strategy aligns with its objective of long-term capital appreciation, making it suitable for investors with a high-risk tolerance who are less concerned with current income. The fund’s aggressive stance is evident in its asset class allocation, with over 60% invested in U.S. equities and more than 20% in non-U.S. equities, providing broad exposure to global markets.
At A Glance
Executive Summary
BAAPX offers aggressive growth with a 0.65% expense ratio, focusing on equity securities for high-risk investors.
Aggressive growth potential with high equity exposure. Managed by BlackRock, a trusted fund family. Diversified across sectors and geographies.
High volatility with negative alpha and Sharpe ratio. Not suitable for income-focused investors. Higher expense ratio compared to some peers.
Performance Analysis: Navigating Market Volatility
BAAPX has demonstrated a mixed performance over various time frames. The fund’s one-year return of 25.34% is impressive, yet it falls short of its benchmark, the S&P 500 Total Return Index, which posted a 37.62% return over the same period. This underperformance is reflected in the fund’s negative alpha of -12.32%, indicating that it has not added value over the benchmark. Additionally, the fund’s Sharpe ratio of -1.05 suggests that it has not effectively compensated investors for the risk taken. Despite these challenges, the fund’s annualized returns since inception stand at 7.07%, showcasing its potential for long-term growth.
Sector Allocation: Technology Leads the Charge
A significant portion of BAAPX’s portfolio is allocated to the technology sector, which comprises 31.13% of its holdings. This heavy weighting towards technology reflects the fund’s aggressive growth strategy, as the sector is known for its potential to deliver high returns. Other notable sector allocations include financials at 14.65% and healthcare at 9.98%, providing a diversified exposure across various industries. The fund’s sector allocation strategy aims to capitalize on growth opportunities while maintaining a balanced approach to risk management. This diversification is crucial for mitigating sector-specific risks and enhancing the fund’s overall performance.
Comparative Analysis: Standing Among Peers
When compared to similar funds, BAAPX presents a competitive profile with its aggressive equity allocation. However, its expense ratio of 0.65% is higher than some peers, such as Nationwide Investor Destn Aggressive-A (NDAAX) with an expense ratio of 0.83%. In terms of performance, BAAPX’s one-year return of 25.34% is slightly lower than NDAAX’s 28.72% but comparable to other peers like Columbia Capital Alloc Aggress-A (AXBAX) and Fidelity Adv Asset Manager 85-A (FEYAX). Despite these differences, BAAPX’s focus on equity growth and its management by BlackRock, a reputable fund family, make it a strong contender in the aggressive balanced category.
Risk Metrics: Understanding the Volatility
Investors considering BAAPX should be aware of its risk metrics, which highlight the fund’s volatility. The fund’s beta of 0.91 indicates a slightly lower sensitivity to market movements compared to the benchmark. However, the negative alpha of -12.32% and a Treynor ratio of -13.50 suggest that the fund has not effectively managed its risk-adjusted returns. The standard deviation of 3.37% and a max drawdown of -7.0% further emphasize the potential for significant fluctuations in value. These metrics underscore the importance of a long-term investment horizon for those considering BAAPX, as short-term volatility may impact returns.
Portfolio Composition: A Diverse Mix of Holdings
BAAPX’s portfolio is composed of a diverse mix of holdings, primarily through its investment in various iShares ETFs. The top holdings include iShares Core S&P 500 ETF (IVV) at 19.23% and iShares S&P 500 Growth ETF (IVW) at 10.36%, reflecting a strong emphasis on U.S. equities. Additionally, the fund includes international exposure through iShares MSCI EAFE Value ETF (EFV) and iShares MSCI Emerging Mkts ex China ETF (EMXC). This diversified approach not only provides exposure to different markets and sectors but also helps in spreading risk across various asset classes, enhancing the fund’s potential for growth.
Market Cap Allocation: Emphasizing Large-Cap Stocks
The market cap allocation of BAAPX reveals a strong preference for large-cap stocks, with 40.30% of the portfolio invested in extra-large companies and 26.70% in large-cap firms. This focus on larger companies is consistent with the fund’s strategy to seek stability and growth potential from well-established firms. Medium-cap stocks account for 12.32% of the portfolio, providing a balance between growth and stability. The minimal allocation to small and micro-cap stocks suggests a cautious approach to higher-risk investments, aligning with the fund’s objective of achieving long-term capital appreciation through a balanced yet aggressive strategy.
Conclusion: Is BAAPX Right for You?
The BlackRock 80/20 Target Allocation-A (BAAPX) stands out as a compelling option for investors seeking aggressive growth through a high equity allocation. Managed by BlackRock, the fund offers a diversified portfolio with significant exposure to technology and large-cap stocks. However, potential investors should be mindful of the fund’s higher expense ratio and its recent underperformance relative to the benchmark. BAAPX is best suited for those with a high-risk tolerance and a long-term investment horizon, as its aggressive strategy may lead to short-term volatility. For investors aligned with these criteria, BAAPX presents an opportunity to capitalize on growth in equity markets.
Similar Securities
OAAAX: Invesco Active Allocation-A | Balanced Aggressive Growth Fund
OAAAX offers a balanced aggressive strategy with a 0.98% expense ratio, focusing on U.S. equities and tactical allocations for growth and income.
ACEIX: Invesco Equity & Income-A | Balanced Aggressive Growth & Income
ACEIX offers a balanced aggressive strategy with a focus on income and growth, featuring a competitive expense ratio and diversified holdings.
FGTIX: Franklin Growth Allocation-A | Aggressive Balanced Growth Fund
FGTIX offers aggressive growth with a balanced approach, featuring a 0.85% expense ratio and a 1.27% yield, ideal for long-term investors.
AADAX: Invesco Select Risk Growth Investor-A | High-Risk Equity Growth Fund
AADAX offers aggressive growth with 95% equity allocation, outperforming peers with a 21.75% 1-year return despite a high expense ratio.
AMECX: American Funds Inc Fd of America-A | Balanced Aggressive Income Fund
AMECX offers a balanced aggressive approach with a 0.58% expense ratio, focusing on income and stability. It features a diverse portfolio with a 2.63% yield.
Futher Reading
https://finance.yahoo.com/quote/BAAPX/”>Yahoo: BlackRock 80/20 Target Allocation-A
https://ftcloud.fasttrack.net/web/chart/BAAPX
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