We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is iShares MSCI USA Multifactor ETF (LRGF) a Strong ETF Right Now?
Read MoreHide Full Article
A smart beta exchange traded fund, the iShares MSCI USA Multifactor ETF (LRGF - Free Report) debuted on 04/28/2015, and offers broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination 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 sponsored by Blackrock. It has amassed assets over $1.26 billion, making it one of the average sized ETFs in the Style Box - Large Cap Value. This particular fund 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.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.20%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.07%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For LRGF, it has heaviest allocation in the Information Technology sector --about 34.30% of the portfolio --while Consumer Discretionary and Industrials round out the top three.
Looking at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 4.08% of total assets, followed by Microsoft Corp (MSFT - Free Report) and Oracle Corp (ORCL - Free Report) .
The top 10 holdings account for about 25.86% of total assets under management.
Performance and Risk
Year-to-date, the iShares MSCI USA Multifactor ETF return is roughly 24.14% so far, and was up about 24.65% over the last 12 months (as of 12/16/2021). LRGF has traded between $37.11 and $45.84 in this past 52-week period.
The ETF has a beta of 0.98 and standard deviation of 23.24% for the trailing three-year period, making it a medium risk choice in the space. With about 155 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares MSCI USA Multifactor ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
IShares Russell 1000 Value ETF (IWD - Free Report) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $58.33 billion in assets, Vanguard Value ETF has $89.77 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.
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 Value.
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.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Is iShares MSCI USA Multifactor ETF (LRGF) a Strong ETF Right Now?
A smart beta exchange traded fund, the iShares MSCI USA Multifactor ETF (LRGF - Free Report) debuted on 04/28/2015, and offers broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination 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 sponsored by Blackrock. It has amassed assets over $1.26 billion, making it one of the average sized ETFs in the Style Box - Large Cap Value. This particular fund 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.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.20%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.07%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For LRGF, it has heaviest allocation in the Information Technology sector --about 34.30% of the portfolio --while Consumer Discretionary and Industrials round out the top three.
Looking at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 4.08% of total assets, followed by Microsoft Corp (MSFT - Free Report) and Oracle Corp (ORCL - Free Report) .
The top 10 holdings account for about 25.86% of total assets under management.
Performance and Risk
Year-to-date, the iShares MSCI USA Multifactor ETF return is roughly 24.14% so far, and was up about 24.65% over the last 12 months (as of 12/16/2021). LRGF has traded between $37.11 and $45.84 in this past 52-week period.
The ETF has a beta of 0.98 and standard deviation of 23.24% for the trailing three-year period, making it a medium risk choice in the space. With about 155 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares MSCI USA Multifactor ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
IShares Russell 1000 Value ETF (IWD - Free Report) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $58.33 billion in assets, Vanguard Value ETF has $89.77 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.
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 Value.
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.