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Since the inception of the iShares MSCI KLD 400 Social ETF (NYSEARCA: DSI) on Nov. 14, 2006, issued by BlackRock iShares, the ETF has generated an annualized 6.64% market price return, as of July 31, 2015. Investors should note past returns are not indicative of the fund's future performance.
The iShares MSCI KLD 400 Social ETF is an exchange-traded fund (ETF) that provides specialized exposure to socially responsible U.S companies. The fund focuses the majority of its holdings in U.S. companies that have positive environmental, social and governance characteristics. DSI aims to track investment results, before fees and expenses, corresponding to the total return performance of the MSCI KLD 400 Social Index. The fund aims to provide these investment results by holding a portfolio of component companies listed in the MSCI KLD 400 Social Index.
As of Aug. 7, 2015, DSI allocates its portfolio to multiple sectors, such as 23.39% information technology; 15.92% consumer discretionary; 15.28% financials; 14.49% health care; 10.34% consumer staples; 9% industrials; 3.84% energy; 3.12% materials; 2.94% telecommunications; 1.55% utilities; and 0.10% cash and derivatives.
The fund's top 10 holdings are 2.65% Procter & Gamble; 2.54% Google Incorporated Class C; 2.51% Verizon Communications Incorporated; 2.48% Google Incorporated Class A; 2.3% Walt Disney; 3.27% Google Incorporated Class C; 2.22% Gilead Sciences Incorporated; 2.14% Merck & Company Incorporated; 1.91% PepsiCo, Inc.; and 1.87% Cisco Systems, Inc. Investors should note the fund's sector allocations and holdings are subject to change.
The iShares MSCI KLD 400 Social ETF is legally structured as an open-ended investment company advised by BlackRock Fund Advisors. DSI is listed on New York Stock Exchange Arca and can be traded on multiple platforms on the secondary market.
The fund has 403 holdings and a turnover ratio of 14%, as of April 30, 2015. DSI is on the expensive side of large blend ETFs. The fund has an expense ratio of 0.50%, while the average expense ratio of its category of large blend is 0.34%.
Suitability and Recommendations
Socially conscious U.S. companies and ETFs, such as the iShares MSCI KLD 400 Social ETF, may be attractive to investors who want to include a socially responsible investment in their portfolios, while maintaining exposure to a broad range of stocks.
As of July 31, 2015, based on trailing five-year data, DSI had an alpha, against the S&P 500 Total Return USD Index, of -0.69; a beta, against the S&P 500 Total Return USD Index, of 0.97; an R-squared value, against the S&P 500 Total Return USD Index, of 97.53; a Sharpe ratio of 1.27; and a Treynor ratio of 15.34.
Based on modern portfolio theory, DSI's alpha indicates it underperformed the S&P 500 Total Return USD Index by an annualized 0.69%. The fund's beta indicates it is theoretically less volatile than the S&P 500 Total Return USD Index; this may signal DSI ca