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Is iShares MSCI USA Equal Weighted ETF (EUSA) a Strong ETF Right Now?
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Launched on 05/05/2010, the iShares MSCI USA Equal Weighted ETF (EUSA - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - All Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
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.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by Blackrock, and has been able to amass over $223.13 million, which makes it one of the average sized ETFs in the Style Box - All Cap Blend. Before fees and expenses, this particular fund 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 has a 12-month trailing dividend yield of 1.74%.
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 17.70% of the portfolio. Its Financials and Industrials round out the top three.
When you look at individual holdings, Match Group Inc (MTCH - Free Report) accounts for about 0.30% of the fund's total assets, followed by Tesla Inc (TSLA - Free Report) and Docusign Inc (DOCU - Free Report) .
EUSA's top 10 holdings account for about 2.34% of its total assets under management.
Performance and Risk
So far this year, EUSA has lost about -1.95%, and was up about 12.02% in the last one year (as of 08/25/2020). During this past 52-week period, the fund has traded between $40.33 and $66.29.
The fund has a beta of 1.15 and standard deviation of 23.11% for the trailing three-year period, which makes EUSA a medium risk choice in this particular space. With about 622 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 SP 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 SP Total U.S. Stock Market ETF has $27.76 billion in assets, Vanguard Total Stock Market ETF has $160.90 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?
Launched on 05/05/2010, the iShares MSCI USA Equal Weighted ETF (EUSA - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - All Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
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.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by Blackrock, and has been able to amass over $223.13 million, which makes it one of the average sized ETFs in the Style Box - All Cap Blend. Before fees and expenses, this particular fund 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 has a 12-month trailing dividend yield of 1.74%.
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 17.70% of the portfolio. Its Financials and Industrials round out the top three.
When you look at individual holdings, Match Group Inc (MTCH - Free Report) accounts for about 0.30% of the fund's total assets, followed by Tesla Inc (TSLA - Free Report) and Docusign Inc (DOCU - Free Report) .
EUSA's top 10 holdings account for about 2.34% of its total assets under management.
Performance and Risk
So far this year, EUSA has lost about -1.95%, and was up about 12.02% in the last one year (as of 08/25/2020). During this past 52-week period, the fund has traded between $40.33 and $66.29.
The fund has a beta of 1.15 and standard deviation of 23.11% for the trailing three-year period, which makes EUSA a medium risk choice in this particular space. With about 622 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 SP 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 SP Total U.S. Stock Market ETF has $27.76 billion in assets, Vanguard Total Stock Market ETF has $160.90 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.