A smart beta exchange traded fund, the iShares MSCI USA Equal Weighted ETF (
EUSA Quick Quote EUSA - Free Report) debuted on 05/05/2010, and offers broad exposure to the Style Box - All Cap Blend category of the market. What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the 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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is sponsored by Blackrock. It has amassed assets over $465.53 million, making it one of the average sized ETFs in the Style Box - All Cap Blend. Before fees and expenses, EUSA 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for EUSA are 0.09%, which makes it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.42%.
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.
Representing 16.60% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Financials and Healthcare round out the top three.
Looking at individual holdings, Analog Devices Inc (
ADI Quick Quote ADI - Free Report) accounts for about 0.33% of total assets, followed by Realty Income Reit Corp ( O Quick Quote O - Free Report) and Tesla Inc ( TSLA Quick Quote TSLA - Free Report) .
Its top 10 holdings account for approximately 2.17% of EUSA's total assets under management.
Performance and Risk
The ETF has lost about -6.64% and is up roughly 4.91% so far this year and in the past one year (as of 04/12/2022), respectively. EUSA has traded between $78.76 and $90.84 during this last 52-week period.
The ETF has a beta of 1.10 and standard deviation of 23.87% for the trailing three-year period, making it a medium risk choice in the space. With about 629 holdings, it effectively diversifies company-specific risk.
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 Quick Quote ITOT - Free Report) tracks S&P Total Market Index and the Vanguard Total Stock Market ETF ( VTI Quick Quote VTI - Free Report) tracks CRSP US Total Market Index. IShares Core S&P Total U.S. Stock Market ETF has $43.48 billion in assets, Vanguard Total Stock Market ETF has $279.08 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.
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.