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Is iShares MSCI USA Equal Weighted ETF (EUSA) a Strong ETF Right Now?
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A smart beta exchange traded fund, the iShares MSCI USA Equal Weighted ETF (EUSA - Free Report) debuted on 05/05/2010, and offers 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.
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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: 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.
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
Managed by Blackrock, EUSA has amassed assets over $491.56 million, making it one of the average sized ETFs in the Style Box - All Cap Blend. EUSA seeks to match the performance of the MSCI USA Equal Weighted Index before fees and expenses.
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.
Annual operating expenses for this ETF are 0.09%, making it one of the least expensive products in the space.
The fund has a 12-month trailing dividend yield of 1.60%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
EUSA's heaviest allocation is in the Information Technology sector, which is about 18.80% of the portfolio. Its Financials and Industrials round out the top three.
Taking into account individual holdings, Horizon Therapeutics Public Plc accounts for about 0.25% of the fund's total assets, followed by Okta Inc Class A (OKTA - Free Report) and Burlington Stores Inc (BURL - Free Report) .
EUSA's top 10 holdings account for about 1.67% of its total assets under management.
Performance and Risk
The ETF has gained about 7.83% so far this year and is down about -3.83% in the last one year (as of 02/20/2023). In the past 52-week period, it has traded between $66.79 and $86.76.
The ETF has a beta of 1.08 and standard deviation of 26.43% for the trailing three-year period, making it a medium risk choice in the space. With about 629 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 $41.04 billion in assets, Vanguard Total Stock Market ETF has $281.70 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?
A smart beta exchange traded fund, the iShares MSCI USA Equal Weighted ETF (EUSA - Free Report) debuted on 05/05/2010, and offers 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.
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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: 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.
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
Managed by Blackrock, EUSA has amassed assets over $491.56 million, making it one of the average sized ETFs in the Style Box - All Cap Blend. EUSA seeks to match the performance of the MSCI USA Equal Weighted Index before fees and expenses.
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.
Annual operating expenses for this ETF are 0.09%, making it one of the least expensive products in the space.
The fund has a 12-month trailing dividend yield of 1.60%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
EUSA's heaviest allocation is in the Information Technology sector, which is about 18.80% of the portfolio. Its Financials and Industrials round out the top three.
Taking into account individual holdings, Horizon Therapeutics Public Plc accounts for about 0.25% of the fund's total assets, followed by Okta Inc Class A (OKTA - Free Report) and Burlington Stores Inc (BURL - Free Report) .
EUSA's top 10 holdings account for about 1.67% of its total assets under management.
Performance and Risk
The ETF has gained about 7.83% so far this year and is down about -3.83% in the last one year (as of 02/20/2023). In the past 52-week period, it has traded between $66.79 and $86.76.
The ETF has a beta of 1.08 and standard deviation of 26.43% for the trailing three-year period, making it a medium risk choice in the space. With about 629 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 $41.04 billion in assets, Vanguard Total Stock Market ETF has $281.70 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.