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Is SPDR MSCI USA StrategicFactors ETF (QUS) a Strong ETF Right Now?
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A smart beta exchange traded fund, the SPDR MSCI USA StrategicFactors ETF (QUS - Free Report) debuted on 04/15/2015, and offers broad exposure to the Style Box - Large Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by State Street Global Advisors, and has been able to amass over $974.40 million, which makes it one of the larger ETFs in the Style Box - Large Cap Blend. QUS, before fees and expenses, seeks to match the performance of the MSCI USA Factor Mix A-Series Index.
The MSCI USA Factor Mix A-Series Index measures the equity market performance of large and mid-cap companies across the U.S. equity market. It aims to represent the performance of a combination of three factors: value, quality, and low volatility.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for QUS are 0.15%, which makes it one of the cheaper products in the space.
The fund has a 12-month trailing dividend yield of 1.31%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, 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 29.10% of the portfolio. Healthcare and Financials round out the top three.
Looking at individual holdings, Microsoft Corporation (MSFT - Free Report) accounts for about 3.52% of total assets, followed by Apple Inc. (AAPL - Free Report) and Johnson & Johnson (JNJ - Free Report) .
Its top 10 holdings account for approximately 21.24% of QUS's total assets under management.
Performance and Risk
The ETF has lost about -2.99% so far this year and is up about 15.17% in the last one year (as of 03/30/2022). In the past 52-week period, it has traded between $111.08 and $131.16.
QUS has a beta of 0.93 and standard deviation of 21.94% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 621 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR MSCI USA StrategicFactors ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P 500 ETF (IVV - Free Report) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY - Free Report) tracks S&P 500 Index. IShares Core S&P 500 ETF has $339.99 billion in assets, SPDR S&P 500 ETF has $421.25 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
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 - Large 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 SPDR MSCI USA StrategicFactors ETF (QUS) a Strong ETF Right Now?
A smart beta exchange traded fund, the SPDR MSCI USA StrategicFactors ETF (QUS - Free Report) debuted on 04/15/2015, and offers broad exposure to the Style Box - Large Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by State Street Global Advisors, and has been able to amass over $974.40 million, which makes it one of the larger ETFs in the Style Box - Large Cap Blend. QUS, before fees and expenses, seeks to match the performance of the MSCI USA Factor Mix A-Series Index.
The MSCI USA Factor Mix A-Series Index measures the equity market performance of large and mid-cap companies across the U.S. equity market. It aims to represent the performance of a combination of three factors: value, quality, and low volatility.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for QUS are 0.15%, which makes it one of the cheaper products in the space.
The fund has a 12-month trailing dividend yield of 1.31%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, 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 29.10% of the portfolio. Healthcare and Financials round out the top three.
Looking at individual holdings, Microsoft Corporation (MSFT - Free Report) accounts for about 3.52% of total assets, followed by Apple Inc. (AAPL - Free Report) and Johnson & Johnson (JNJ - Free Report) .
Its top 10 holdings account for approximately 21.24% of QUS's total assets under management.
Performance and Risk
The ETF has lost about -2.99% so far this year and is up about 15.17% in the last one year (as of 03/30/2022). In the past 52-week period, it has traded between $111.08 and $131.16.
QUS has a beta of 0.93 and standard deviation of 21.94% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 621 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR MSCI USA StrategicFactors ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P 500 ETF (IVV - Free Report) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY - Free Report) tracks S&P 500 Index. IShares Core S&P 500 ETF has $339.99 billion in assets, SPDR S&P 500 ETF has $421.25 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
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 - Large 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.