Designed to provide broad exposure to the Large Cap Value segment of the US equity market, the iShares MSCI USA Multifactor ETF (
LRGF Quick Quote LRGF - Free Report) is a passively managed exchange traded fund launched on 04/28/2015.
The fund is sponsored by Blackrock. It has amassed assets over $1.01 billion, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Large cap companies typically have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.
Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their lower than average sales and earnings growth rates. Considering long-term performance, value stocks have outperformed growth stocks in almost all markets; however, they are more likely to underperform growth stocks in strong bull markets.
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.20%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.12%.
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 to the Information Technology sector--about 29.70% of the portfolio. Healthcare and Consumer Discretionary round out the top three.
Looking at individual holdings, Apple Inc (
AAPL Quick Quote AAPL - Free Report) accounts for about 4.14% of total assets, followed by Intel Corporation Corp ( INTC Quick Quote INTC - Free Report) and Microsoft Corp ( MSFT Quick Quote MSFT - Free Report) .
The top 10 holdings account for about 24.8% of total assets under management.
Performance and Risk
LRGF seeks to match the performance of the MSCI USA Diversified Multiple-Factor Index before fees and expenses. The MSCI USA Diversified Multiple-Factor Index is composed of U.S. large and mid-capitalization stocks that have favourable exposure to target style factors subject to constraints.
The ETF has gained about 12.48% so far this year and is up roughly 48.72% in the last one year (as of 05/14/2021). In the past 52-week period, it has traded between $28.76 and $42.86.
The ETF has a beta of 0.98 and standard deviation of 23.49% for the trailing three-year period, making it a medium risk choice in the space. With about 169 holdings, it effectively diversifies company-specific risk.
IShares MSCI USA Multifactor ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, LRGF is a good option for those seeking exposure to the Style Box - Large Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 1000 Value ETF (
IWD Quick Quote IWD - Free Report) and the Vanguard Value ETF ( VTV Quick Quote VTV - Free Report) track a similar index. While iShares Russell 1000 Value ETF has $53.45 billion in assets, Vanguard Value ETF has $76.80 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%. Bottom-Line
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
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.