iShares S&P Global Energy (IXC)

[Timothy Smith]

IXC is currently trading at roughly $39 per share. Its expense ratio is only 0.48%, which is a bargain in comparison to competing funds.

IXC has yielded a relatively low risk return to investors with a fund specific beta value of 1.23, slightly higher than the market beta of 1. Using IXC's monthly holding period returns with distributions for the past six months, I computed an alpha value of -1.3 indicating IXC is currently overvalued.

This is merely a warning sign to investors who are looking to enter a short-term position because with this alpha value there is a potential for a slightly pull back in its market value per share. On the other hand, for investors considering a long term position this metric is less relevant and should solely be used to gage the correct time for an entry point in the security.

To provide investors with a better idea of what to expect over the next year, I computed an expected return of 14.5%. This value represents a base case scenario and takes into account the funds current valuation as well as the financial condition of its top holdings.

IXC is currently managed by BlackRock fund advisers with roughly $1.011 billion in assets under management. Since IXC's inception in 2001, it has experienced its fair share of ups and downs in its relative asset value, but overall IXC is a well managed fund that has yielded a strong long-term return to investors.