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Is iShares MSCI USA Equal Weighted ETF (EUSA) a Strong ETF Right Now?
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The iShares MSCI USA Equal Weighted ETF (EUSA - Free Report) was launched on 05/05/2010, and is a smart beta exchange traded fund designed to offer 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Because the fund has amassed over $496.54 million, this makes it one of the larger ETFs in the Style Box - All Cap Blend. EUSA is managed by Blackrock. EUSA, before fees and expenses, 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
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.
Operating expenses on an annual basis are 0.09% for EUSA, making it one of the least expensive products in the space.
It's 12-month trailing dividend yield comes in at 1.31%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
For EUSA, it has heaviest allocation in the Information Technology sector --about 18.80% of the portfolio --while Financials and Industrials round out the top three.
When you look at individual holdings, Analog Devices Inc (ADI - Free Report) accounts for about 0.33% of the fund's total assets, followed by Realty Income Reit Corp (O - Free Report) and Tesla Inc (TSLA - Free Report) .
Its top 10 holdings account for approximately 2.17% of EUSA's total assets under management.
Performance and Risk
Year-to-date, the iShares MSCI USA Equal Weighted ETF has lost about -5.92% so far, and is up roughly 13.94% over the last 12 months (as of 02/07/2022). EUSA has traded between $74.34 and $90.84 in this past 52-week period.
The fund has a beta of 1.11 and standard deviation of 23.41% for the trailing three-year period, which makes EUSA a medium risk choice in this particular 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 $44.42 billion in assets, Vanguard Total Stock Market ETF has $279.88 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?
The iShares MSCI USA Equal Weighted ETF (EUSA - Free Report) was launched on 05/05/2010, and is a smart beta exchange traded fund designed to offer 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Because the fund has amassed over $496.54 million, this makes it one of the larger ETFs in the Style Box - All Cap Blend. EUSA is managed by Blackrock. EUSA, before fees and expenses, 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
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.
Operating expenses on an annual basis are 0.09% for EUSA, making it one of the least expensive products in the space.
It's 12-month trailing dividend yield comes in at 1.31%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
For EUSA, it has heaviest allocation in the Information Technology sector --about 18.80% of the portfolio --while Financials and Industrials round out the top three.
When you look at individual holdings, Analog Devices Inc (ADI - Free Report) accounts for about 0.33% of the fund's total assets, followed by Realty Income Reit Corp (O - Free Report) and Tesla Inc (TSLA - Free Report) .
Its top 10 holdings account for approximately 2.17% of EUSA's total assets under management.
Performance and Risk
Year-to-date, the iShares MSCI USA Equal Weighted ETF has lost about -5.92% so far, and is up roughly 13.94% over the last 12 months (as of 02/07/2022). EUSA has traded between $74.34 and $90.84 in this past 52-week period.
The fund has a beta of 1.11 and standard deviation of 23.41% for the trailing three-year period, which makes EUSA a medium risk choice in this particular 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 $44.42 billion in assets, Vanguard Total Stock Market ETF has $279.88 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.