iShares Global 100 AUD ETF (ASX: IOO) is trading at $190.37 on Thursday, up 2.27%.
IOO ETF is an index-tracking ETF that provides investors with exposure to the 100 largest companies in the world.
That sounds like smart investing, especially if you like the sleep-at-night factor of your money being in large, established companies.
However, it's worth noting that since so many of the world's most successful companies are based in the US, your geographic diversification is pretty narrow with this ETF.
About 81% of the underlying stocks it invests in, by mirroring the S&P Global 100 Index, are US companies. The next biggest geographic exposures are the United Kingdom 4%, Switzerland 3%, Germany 3%, France 2%, Japan 2%, China 1%, and the Netherlands 1%.
Tied to that narrow geographic diversification is lower sector diversification, given that the biggest companies in the US are tech-heavy.
About 45% of the IOO ETF's stocks are in the technology sector. The other big sector exposures are communications 10%, financials 10%, consumer discretionary 9%, healthcare 9%, and consumer staples 6%.
Like many diversified ASX ETFs invested in international shares, the IOO ETF has benefited from the US market's screaming three-year run.
The narrow geographic and sector diversification has strongly worked in investors' favour, and in tandem with the explosive growth of the 'Magnificent Seven' — Nvidia, Apple, Microsoft, Amazon, Alphabet Class A and Class C, Meta Platforms, and Tesla.
Let's see how all this translates for a $10,000 investment in the IOO ETF three years ago.
Image source: Getty Images
What is $10,000 in IOO ETF worth now?
On 21 November 2022, IOO closed at $65.91 apiece.
If you had put $10,000 into the IOO ETF then, it would have bought you 151 units (for $9,952.41).
There's been capital growth of $124.46 per unit since then, which equates to $18,793.46 in dollar terms.
IOO ETF also pays dividends (or 'distributions' with ETFs) twice per year.
Since 21 November 2022, IOO has paid $3.50 per unit in distributions.
This means you would have received $528.50 in dividend income over the past three years.
Your capital gain of $18,793.46 plus your distributions of $528.50 gives you a total return in dollar terms of $19,321.96.
To recap, you invested $9,952.41 buying your 151 units of IOO ETF on 21 November 2022.
This means you have received a total return, in percentage terms, of 194% since then.
Today, your $10,000 investment in IOO ETF is worth $28,745 (excluding your $528.50 in income, which you spent on something fun).
The iShares Global 100 AUD ETF has a management fee of 0.4%.
