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Should Principal U.S. MegaCap ETF (USMC) Be on Your Investing Radar?
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Looking for broad exposure to the Large Cap Blend segment of the US equity market? You should consider the Principal U.S. MegaCap ETF (USMC - Free Report) , a passively managed exchange traded fund launched on 10/12/2017.
The fund is sponsored by Principal Funds. It has amassed assets over $2.16 billion, making it one of the larger ETFs attempting to match the Large Cap Blend segment of the US equity market.
Why Large Cap Blend
Large cap companies typically have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.
Blend ETFs are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.
Costs
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.12%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.41%.
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 to the Information Technology sector--about 30% of the portfolio. Healthcare and Telecom round out the top three.
Looking at individual holdings, Apple Inc Common Stock Usd.00001 (AAPL - Free Report) accounts for about 5.87% of total assets, followed by Berkshire Hathaway Inc Cl B Common Stock Usd.0033 (BRK.B - Free Report) and Pfizer Inc Common Stock Usd.05 (PFE - Free Report) .
The top 10 holdings account for about 32.76% of total assets under management.
Performance and Risk
USMC seeks to match the performance of the Nasdaq US Mega Cap Select Leaders Index before fees and expenses. The Nasdaq U.S. Mega Cap Select Leaders Index uses a quantitative model designed to identify equity securities of companies with the largest market capitalizations in the Nasdaq US 500 Large Cap Index, with higher weights given to securities that are less volatile.
The ETF return is roughly 24.05% so far this year and is up about 33.63% in the last one year (as of 11/05/2021). In the past 52-week period, it has traded between $33.53 and $43.38.
The ETF has a beta of 0.90 and standard deviation of 21.27% for the trailing three-year period. With about 48 holdings, it has more concentrated exposure than peers.
Alternatives
Principal U.S. MegaCap 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, USMC is a sufficient option for those seeking exposure to the Style Box - Large Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Core S&P 500 ETF (IVV - Free Report) and the SPDR S&P 500 ETF (SPY - Free Report) track a similar index. While iShares Core S&P 500 ETF has $322.64 billion in assets, SPDR S&P 500 ETF has $426.34 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
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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Should Principal U.S. MegaCap ETF (USMC) Be on Your Investing Radar?
Looking for broad exposure to the Large Cap Blend segment of the US equity market? You should consider the Principal U.S. MegaCap ETF (USMC - Free Report) , a passively managed exchange traded fund launched on 10/12/2017.
The fund is sponsored by Principal Funds. It has amassed assets over $2.16 billion, making it one of the larger ETFs attempting to match the Large Cap Blend segment of the US equity market.
Why Large Cap Blend
Large cap companies typically have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.
Blend ETFs are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.
Costs
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.12%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.41%.
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 to the Information Technology sector--about 30% of the portfolio. Healthcare and Telecom round out the top three.
Looking at individual holdings, Apple Inc Common Stock Usd.00001 (AAPL - Free Report) accounts for about 5.87% of total assets, followed by Berkshire Hathaway Inc Cl B Common Stock Usd.0033 (BRK.B - Free Report) and Pfizer Inc Common Stock Usd.05 (PFE - Free Report) .
The top 10 holdings account for about 32.76% of total assets under management.
Performance and Risk
USMC seeks to match the performance of the Nasdaq US Mega Cap Select Leaders Index before fees and expenses. The Nasdaq U.S. Mega Cap Select Leaders Index uses a quantitative model designed to identify equity securities of companies with the largest market capitalizations in the Nasdaq US 500 Large Cap Index, with higher weights given to securities that are less volatile.
The ETF return is roughly 24.05% so far this year and is up about 33.63% in the last one year (as of 11/05/2021). In the past 52-week period, it has traded between $33.53 and $43.38.
The ETF has a beta of 0.90 and standard deviation of 21.27% for the trailing three-year period. With about 48 holdings, it has more concentrated exposure than peers.
Alternatives
Principal U.S. MegaCap 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, USMC is a sufficient option for those seeking exposure to the Style Box - Large Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Core S&P 500 ETF (IVV - Free Report) and the SPDR S&P 500 ETF (SPY - Free Report) track a similar index. While iShares Core S&P 500 ETF has $322.64 billion in assets, SPDR S&P 500 ETF has $426.34 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
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.