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Is iShares MSCI USA Equal Weighted ETF (EUSA) a Strong ETF Right Now?
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The iShares MSCI USA Equal Weighted ETF (EUSA - Free Report) was launched on 05/05/2010, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - All Cap Blend category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by Blackrock. EUSA has been able to amass assets over $266.91 million, making it one of the average sized ETFs in the Style Box - All Cap Blend. EUSA, before fees and expenses, seeks to match the performance of the MSCI USA Equal Weighted Index.
The MSCI USA Equal Weighted Index represents the MSCI USA Index, measures the performance of equity securities in the top 85% by market capitalization of equity securities listed on stock exchanges in the United States.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.15% for EUSA, making it one of the cheaper products in the space.
It's 12-month trailing dividend yield comes in at 1.63%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector - about 18% of the portfolio. Financials and Industrials round out the top three.
Looking at individual holdings, Charles Schwab Corp (SCHW - Free Report) accounts for about 0.33% of total assets, followed by Morgan Stanley (MS - Free Report) and Zoom Video Communications Inc Clas (ZM - Free Report) .
EUSA's top 10 holdings account for about 2.42% of its total assets under management.
Performance and Risk
So far this year, EUSA has gained about 11.09%, and is up about 14.94% in the last one year (as of 11/25/2020). During this past 52-week period, the fund has traded between $40.33 and $70.24.
The ETF has a beta of 1.12 and standard deviation of 23.81% for the trailing three-year period, making it a medium risk choice in the space. With about 623 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares MSCI USA Equal Weighted ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P Total U.S. Stock Market ETF (ITOT - Free Report) tracks S&P Total Market Index and the Vanguard Total Stock Market ETF (VTI - Free Report) tracks CRSP US Total Market Index. IShares Core S&P Total U.S. Stock Market ETF has $30.73 billion in assets, Vanguard Total Stock Market ETF has $183.81 billion. ITOT has an expense ratio of 0.03% and VTI charges 0.03%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - All Cap Blend.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Is iShares MSCI USA Equal Weighted ETF (EUSA) a Strong ETF Right Now?
The iShares MSCI USA Equal Weighted ETF (EUSA - Free Report) was launched on 05/05/2010, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - All Cap Blend category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by Blackrock. EUSA has been able to amass assets over $266.91 million, making it one of the average sized ETFs in the Style Box - All Cap Blend. EUSA, before fees and expenses, seeks to match the performance of the MSCI USA Equal Weighted Index.
The MSCI USA Equal Weighted Index represents the MSCI USA Index, measures the performance of equity securities in the top 85% by market capitalization of equity securities listed on stock exchanges in the United States.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.15% for EUSA, making it one of the cheaper products in the space.
It's 12-month trailing dividend yield comes in at 1.63%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector - about 18% of the portfolio. Financials and Industrials round out the top three.
Looking at individual holdings, Charles Schwab Corp (SCHW - Free Report) accounts for about 0.33% of total assets, followed by Morgan Stanley (MS - Free Report) and Zoom Video Communications Inc Clas (ZM - Free Report) .
EUSA's top 10 holdings account for about 2.42% of its total assets under management.
Performance and Risk
So far this year, EUSA has gained about 11.09%, and is up about 14.94% in the last one year (as of 11/25/2020). During this past 52-week period, the fund has traded between $40.33 and $70.24.
The ETF has a beta of 1.12 and standard deviation of 23.81% for the trailing three-year period, making it a medium risk choice in the space. With about 623 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares MSCI USA Equal Weighted ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P Total U.S. Stock Market ETF (ITOT - Free Report) tracks S&P Total Market Index and the Vanguard Total Stock Market ETF (VTI - Free Report) tracks CRSP US Total Market Index. IShares Core S&P Total U.S. Stock Market ETF has $30.73 billion in assets, Vanguard Total Stock Market ETF has $183.81 billion. ITOT has an expense ratio of 0.03% and VTI charges 0.03%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - All Cap Blend.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.