Australian (ASX) Stock Market Forum

IOZ - iShares CORE S&P/ASX 200 ETF

27 June 2010
The iShares MSCI Australia 200 fund aims to provide investors with the performance of the market, before fees and expenses, as represented by the MSCI Australia 200 Index. The Fund invests in Australian shares and trusts listed on the Australian Securities Exchange, and seeks to use a full replication strategy to track the performance of the MSCI Australia 200 Index.
Re: IOZ - iShares S&P/ASX 200 ETF

On December 3rd, 2015, iShares MSCI Australia 200 ETF changed its name to iShares S&P/ASX 200 ETF.
On May 3rd, 2016, iShares S&P/ASX 200 ETF changed its name to iShares CORE S&P/ASX 200 ETF.
September was a funny month, especially the last two trading days. On both occasions, IOZ didn't enjoy the same boost om the closing auction as XJO, the index which it replicates. Today, especially, XJO was up about 30 points in the closing auction, while IOZ was sold off. I do expect a relative adjustment of about 0.6% between the two at the start of trading tomorrow (Friday).

Also, the September just closed broke a winning streak of 11 consecutive up months for the major Australian index. :(

Anyway, back to reason for posting. IOZ is my choice for the October competition. Don't laugh. :)

Its in the numbers. Do I think it will go up? Do I think it will go down? I really don't have an opinion. But, what I do know, is that IOZ has a probability of better than 50% of going up, so it is my selection. See the attached table.

For me its all about choosing a consistent performer. It probably won't be the best performer on the ASX during October, but it certainly won't be the worst, and it has a better chance than not of finishing October at a price better than today's close of $30.28. I don't want to finish last with my first entry in this competition!

As an aside, October has been the third most volatile month in recent times. The High - Low range is expected to be about 6.5%, so hang on to your hats. I expect this October to be no different to all the others.

The attached table shows XJO statistics for the past 16 years. The first table shows last October to the September just finished, the same for the 4, 8 and 16 year tables. Rank is a positioning thing, so, for example, October in the 4 year table, it is the third most volatile month with a range of 6.713%


The numbers are my own work, extracted from NABTrade charts:

XJO Analysis.png
There were more end of month shenanigans on display on the last trading day of October than you would find in a pub full of leprechauns on the day before Melbourne Cup. Its becoming the "thing", and I'm really losing faith in the validity of prices on the last day of the month.

Yesterday (Friday 29 Oct) saw a steady sale of the larger stocks, with the main indices finishing down 1.5% (approx) for no apparent reason. What's a little inflation to do with things? Everyone has known about rising prices, and the threat of rising interest rates, for a long time. So what if interest rates go from 0.25% to 0.5% or even 1%? There was absolutely no reason for yesterday's sell-off.

There is only one answer. It was the last day of the month and the bigger players needed to make their books "look pretty" for the monthly reports.

On the strength of that, I bought more IOZ at yesterday's close. The sell-off was too good to be true for a bloke with money burning a hole in his pocket. I just had to spend some, and IOZ was my poison. ANZ got a little bit of the closing match action, too.

Now, for November.

On the averages presented, November is always in the top 4 most volatile months. Last year the ASX 200 index moved an incredible 13.7% between low and high during November and, luckily for the longs, finished up just shy of 10%.

Although it is one of the most volatile months, over the long term, November tends to move very little, with the ASX 200 index finishing within 1% of where it opened.

Yes, I'm sticking with IOZ, a proxy for the ASX 200 index, for November. The economy is opening up, people will be travelling again, although not to Melbourne for the Cup, and all of the large companies will continue raking in the profits. The long term stats don't look good for the month, but I'm placing my money on this nag that will run a true 2 miles, and continue at a steady gallop while all the pretenders drop off one by one.


The figures below are my own work, data extracted from NABTrade charts.

XJO Analysis 2111.png
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ok ... nice sell-off at the final auction.
IOZ goes from 29.92 to 29.75
XJO goes from 7290 to 7256.
also, S&P 500 futures have fallen off the proverbial cliff.

At the close.png
For December:

That was a nasty sell-off to end November, and the overseas indices are still falling as I write. S&P 500 futures are now down 60 in the last hour or so.

However, I believe in Santa Claus. The price history of XJO, a close relative to IOZ, tells us that Santa usually comes before the end of December. So, the index hugging IOZ is still my preference to any other stock in the Australian market.

Included is the usual table, showing that December is one of the less volatile months on the Australian equities calendar, and, over the long term, the market index has a history of rising about 1% during the month.

XJO Analysis 211130.png

Merry Christmas!
Old faithful. The ETF that never stops giving. Quarterly distributions, mostly fully franked, and an almost certain guarantee to out-perform most stock-picker funds. This is the biggest holding in my portfolio, and rightly so, too.

IOZ continues to be my favourite entity that is listed on the ASX, and so it is #1 in my selections for the 2022 Full Year Tipping Competition, and also in the January 2022 tipping competition.

Light orange VAS line is largely obscured by IOZ candles but chart says VAS and IOZ same?

Weekly all data chart IOZ cf VAS for same period
big (44).gif
i hold VAS but am looking for a satisfactory exit ( profit )

VAS looked the superior ( to me ) holding for capital gains ( those 100 extra mid-caps with a chance to grow ) back in 2011

however VAS ( Vanguard to be more accurate ) have decided to be more active with the shares they control ( often against my wishes )

so replacements ( for VAS , VHY and IHD ) are being watched , closely

IOZ is on the shortlist but is no sure thing to be selected

as my NIC says divs. will be a primary focus

given the lack of performance among the 'blue chips ' it is a shame i haven't spotted an ex top 50 ETF , it looks like MVW will be preferred as one of the replacements ( probably the IHD replacement )
VAS looked the superior ( to me ) holding for capital gains ( those 100 extra mid-caps with a chance to grow ) back in 2011

however VAS ( Vanguard to be more accurate ) have decided to be more active with the shares they control ( often against my wishes )

Since when do your wishes come into it, especially in respect of index funds? Can you tell me which Vanguard product you think you are referring to? Vanguard has both actively managed funds and index ETFs.

If you bothered to look rather than dream something up you would discover this:

"Vanguard’s indexing approach​

Some index managers like Vanguard use optimisation techniques to build portfolios that mirror the index. Rather than holding all the securities in the index like fully replicated funds, the portfolio holds a representative sample. This is called partial replication.
Optimisation aims to reduce the higher costs of owning all the securities in the index while continuing to match the index return. Some indexes contain many illiquid stocks making it impractical and costly to own every stock in the index.

With partial replication, the portfolio still tracks the index closely, but the costs of trading in many illiquid stocks in the small, 'tail end' of the index are reduced. The fund still holds small capitalisation stocks but rather than holding every stock in the index, a representative sample is held.

With optimised index portfolios, fund managers don't need to constantly buy and sell securities when index weightings change, resulting in lower turnover, costs and tax. Trading only becomes necessary when the index constituents actually change, or where buying and selling is necessary to meet applications and withdrawals. [Bolding is mine.]

Optimisation takes a large number of factors into account, including the financial characteristics of securities in the index and the correlation in behaviour between stocks. This way, the index manager builds a portfolio that is "optimal", reducing the tracking error of the portfolio relative to the index while at the same time keeping transaction costs low."

Doubt if you will take it on board as it doesn't fit with a distorted view of indexing.
ok, there has been a few responses to my recent IOZ postings ... so I'll tell you the real reason why I own IOZ ...

The truth it that I'm a terrible stock picker. Can't pick one for peanuts. I have a long history of getting into a position, then either (i) selling it and watch the price go through the roof, or (ii) not selling it, and suffering capital losses.

IOZ has performed as it should, i.e. it follows the market. Nothing more, nothing less. Given my stock picking history, I'm very happy having obtaining a return very similar to the market (whether it be up or down), with little cost.

There are a few alternatives in this space. VAS, A200 and STW. They are all virtually the same. Any one of them will do the same job. Its a coin-toss between them all. Together with IOZ, they are all index based ETFs. None of these fancy high-cost, thematic ETFs for me. An index based ETF, or no ETF at all.

So, IOZ for the long term investment portion of the portfolio, systematic selection of stocks and commodities for the balance. It does ok.

The truth it that I'm a terrible stock picker. Can't pick one for peanuts.

Welcome to my world. :)

Discovered my lack of competence many years ago hence only LICs and ETS. Have been in ETFs since early 2002 when STW listed and only sold when VAS was listed. That was probably not the greatest move either simply swapping ASX 200 (c 95% of the market) for ASX 300 (c 97% of the market). Staying in STW in all likelihood would not have made very much of a difference.

have only had one successful stock pick in 10 years ( MQG pre-SYD bonus , av. $26.76 or $18.76 if you deduct the now sold SYD )

the rest go up or down completely ignoring my hopes , dreams and ambitions ( yes i hope GOOD stocks will go down so i buy more cheap , and bad stocks go up so i break-even or even make a little profit )

however resisting excessive greed has been my savior , i will look at a stock and see nose-bleed valuations and lacklustre future earnings and consider taking some cash off the table

near the end of the day i picked up some ZYAU which will probably bulked up in a BIG dip as the VAS replacement ( at least they don't openly vote against me at AGMs )

there are very subtle differences between the various index ETFs ( not just the fee structures ) but those tiny details can have long term impacts

IOZ is still on that short-list ( and they could easily stay on it for months )

BTW don't forget the M&A activity impacts these ETFs quite a bit

VAS suited my thinking back in 2011 , Vanguard have made policy changes , that have made several rivals more appealing ( for possibly the next 10 years ) STW was narrowly beaten back then and i went for SYI in preference to RDV

SYI has a pleasant habit of finding extra divs when others are bland ( but no guarantee that will happen in the future )

HOWEVER ETFs ( combined ) are less than 10% of my equity portfolio , and currently still prefer LICs ( at a discount ) over ETFs

now IF the markets melt-down .. that balance could change depending on prices ( when share prices fall below NTA and intrinsic values )
given the lack of performance among the 'blue chips ' it is a shame i haven't spotted an ex top 50 ETF , it looks like MVW will be preferred as one of the replacements ( probably the IHD replacement )

what about EX20, a BetaShares ETF that holds no. 21-200 from the ASX200 by market cap? MER is a bit high for my taste at 0.25%, but it's still on my "to be considered" list if i think i need to add a bit more diversity to my ETF portfolio later on (sticking with just IVV / VEU for now).
IOZ is an index-based ETF, with the aim of matching the return of XJO, on the S&P ASX 200 index. So, when I write about XJO below, the same analysis can be applied to IOZ.

Firstly, for January 2022:
  • XJO Range: 11.58%
  • XJO Return: -6.35%

The month just concluded is the first time that we've had a range this large combined with a negative return since February 2020. I'm sure I don't have to remind everyone what happened in March 2020, but I will, just in case there are people reading this who have selective memory loss:
  • XJO Range 32.94%
  • XJO Return: -21.18%.

Now that the formal part of proceedings is over, lets have a look at February.

On a short to medium term basis, February can be quite a volatile month. The four year average range is 7.18%, while the 8 year average range is 6.87%. This makes February the third most volatile month over four years, and the second most volatile month over the past 8 years.

Despite having a reputation for volatility, price, on average, doesn't move that much when measured over the most recent past. Less than 1% on average for the four and eight year timeframes.

All good reasons for not selecting IOZ in the February 2022 tipping competition.

However, I'm a contrarian, and I'm still waiting for Santa Claus to complete his deliveries, so IOZ is my choice once again.


And, if you want to read the figures, here they are for the last four and eight year averages:

XJO Analysis 2201.png
Just some observations.

The 50-day moving average crossed below the 200-day moving averages today. Some call that the Death Cross. (spooky)


If one had of bought IOZ on the day of the crossing on 18 March 2020, one would have been buying near the bottom of the market, which happened 3 days later. (so go figure)