BDOAX
iShares MSCI Total Intern’l IxFd-InvA
Global Reach with BDOAX
The iShares MSCI Total International Index Fund – Investor A (BDOAX) is designed to provide investors with broad exposure to international markets, excluding the United States. Managed by BlackRock, this fund aims to replicate the performance of the MSCI ACWI ex-US Index, a benchmark that includes a diverse range of large and mid-cap stocks from developed and emerging markets. With a focus on foreign large-cap equities, BDOAX is an attractive option for investors seeking to diversify their portfolios beyond domestic borders. The fund’s strategy of investing at least 80% of its assets in securities that are part of the MSCI ACWI ex-US Index ensures that it remains closely aligned with its benchmark, offering a comprehensive approach to international investing.
At A Glance
Executive Summary
BDOAX offers global exposure with a 0.42% expense ratio, focusing on large-cap international stocks. It closely tracks the MSCI ACWI ex-US Index.
Pros:
- Global diversification with large-cap focus; Strong alignment with MSCI ACWI ex-US Index; Managed by BlackRock, a trusted name.
Cons:
- Higher expense ratio compared to some peers; Recent underperformance against benchmark; Limited exposure to small-cap stocks.
Performance Analysis: A Year in Review
Over the past year, BDOAX has delivered a return of 16.41%, slightly underperforming its benchmark, the MSCI ACWI xUS DivAdj Index, which returned 17.25%. This performance is reflective of the fund’s high correlation with its benchmark, at 97.54%, indicating that it closely follows the index’s movements. Despite this close alignment, the fund’s alpha of -0.86% suggests that it has not added value beyond the benchmark’s performance. The fund’s beta of 1.09 indicates a slightly higher volatility compared to the benchmark, which may appeal to investors looking for a fund that can capture more upside in rising markets. However, the negative Sharpe and Treynor ratios highlight the challenges in achieving risk-adjusted returns over the period.
Sector Allocation: Financials Lead the Way
BDOAX’s sector allocation is heavily weighted towards financials, which constitute 22.24% of the portfolio. This significant exposure to the financial sector reflects the fund’s strategy to capitalize on the growth potential of international financial institutions. Other notable sectors include technology (13.40%) and industrials (13.61%), which provide a balanced approach to capturing growth across various industries. The fund’s allocation to healthcare (9.68%) and cyclical sectors (10.50%) further diversifies its holdings, offering exposure to both defensive and growth-oriented industries. This diversified sector allocation is designed to mitigate risks associated with any single industry, providing a stable foundation for long-term growth.
Top Holdings: A Focus on Market Leaders
The top holdings of BDOAX include some of the most prominent names in the global market, such as Taiwan Semiconductor Manufacturing Co Ltd, Novo Nordisk AS, and Tencent Holdings Ltd. These companies represent a combined 5.34% of the fund’s total assets, highlighting a focus on market leaders with strong growth prospects. The inclusion of companies like ASML Holding NV and Nestle SA further underscores the fund’s strategy of investing in established firms with a proven track record of performance. This approach not only provides stability but also positions the fund to benefit from the continued success of these industry giants, making it an appealing choice for investors seeking exposure to high-quality international stocks.
Risk Metrics: Understanding Volatility and Drawdowns
BDOAX exhibits a beta of 1.09, indicating a slightly higher volatility compared to its benchmark. The fund’s standard deviation of 3.64% and a max drawdown of -7.8% reflect the inherent risks associated with international investing. Despite these risks, the fund’s R-squared value of 95.13% suggests a strong alignment with its benchmark, providing investors with a reliable measure of its performance relative to the index. The downside risk, measured at 2.29%, and the negative upside potential of -0.37% highlight the challenges in achieving consistent returns. Investors should consider these risk metrics when evaluating the fund’s suitability for their portfolios, particularly if they are risk-averse.
Comparative Analysis: How BDOAX Stacks Up
When compared to similar funds, BDOAX’s expense ratio of 0.42% is higher than some of its peers, such as the Principal International Equity Index Fund (PIDIX) with an expense ratio of 0.33%. However, BDOAX offers a competitive yield of 2.79%, which is higher than the yield of Fidelity Diversified International (FDIVX) at 1.57%. In terms of performance, BDOAX’s one-year return of 16.41% is slightly lower than FDIVX’s 19.15%, but it remains competitive within its category. The fund’s beta of 1.09 is higher than that of its peers, indicating a greater sensitivity to market movements, which may appeal to investors seeking higher potential returns in exchange for increased volatility.
Investor Suitability: Who Should Consider BDOAX?
BDOAX is well-suited for investors looking to diversify their portfolios with international exposure, particularly those interested in large-cap stocks from developed and emerging markets. The fund’s focus on replicating the MSCI ACWI ex-US Index makes it an ideal choice for investors seeking a passive investment strategy that closely tracks a comprehensive international benchmark. However, the fund’s higher expense ratio and recent underperformance relative to its benchmark may be a consideration for cost-conscious investors. Additionally, those with a lower risk tolerance should be mindful of the fund’s volatility and potential for drawdowns, as indicated by its risk metrics.
Conclusion: BDOAX’s Place in a Diversified Portfolio
In conclusion, the iShares MSCI Total International Index Fund – Investor A (BDOAX) offers a robust option for investors seeking global diversification through a well-managed fund by BlackRock. Its alignment with the MSCI ACWI ex-US Index ensures broad exposure to international markets, making it a valuable component of a diversified investment strategy. While the fund’s expense ratio is higher than some peers, its yield and sector diversification provide compelling reasons for consideration. Investors should weigh the fund’s potential for growth against its volatility and recent performance trends to determine its fit within their overall investment objectives.
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Futher Reading
https://www.morningstar.com/funds/xnas/BDOAX/quote
https://finance.yahoo.com/quote/BDOAX/”>Yahoo: iShares MSCI Total Intern’l IxFd-InvA
https://ftcloud.fasttrack.net/web/chart/BDOAX
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