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
The iShares MSCI USA Multifactor ETF (LRGF - Free Report) was launched on 04/28/2015, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
LRGF is managed by Blackrock, and this fund has amassed over $1.23 billion, which makes it one of the average sized ETFs in the Style Box - Large Cap Value. Before fees and expenses, LRGF seeks to match the performance of the MSCI USA Diversified Multiple-Factor Index.
The MSCI USA Diversified Multiple-Factor Index is composed of U.S. large and mid-capitalization stocks that have favorable 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.
Operating expenses on an annual basis are 0.08% for LRGF, making it one of the least expensive products in the space.
LRGF's 12-month trailing dividend yield is 1.26%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
For LRGF, it has heaviest allocation in the Information Technology sector --about 28.90% of the portfolio --while Healthcare and Consumer Discretionary round out the top three.
When you look at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 4.49% of the fund's total assets, followed by Microsoft Corp (MSFT - Free Report) and Cisco Systems Inc (CSCO - Free Report) .
The top 10 holdings account for about 25.58% of total assets under management.
Performance and Risk
The ETF has lost about -4.58% and it's up approximately 5.68% so far this year and in the past one year (as of 04/22/2022), respectively. LRGF has traded between $41.07 and $46.80 during this last 52-week period.
LRGF has a beta of 0.98 and standard deviation of 23.40% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 165 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares MSCI USA Multifactor ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
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 $57.23 billion in assets, Vanguard Value ETF has $103.62 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?
The iShares MSCI USA Multifactor ETF (LRGF - Free Report) was launched on 04/28/2015, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
LRGF is managed by Blackrock, and this fund has amassed over $1.23 billion, which makes it one of the average sized ETFs in the Style Box - Large Cap Value. Before fees and expenses, LRGF seeks to match the performance of the MSCI USA Diversified Multiple-Factor Index.
The MSCI USA Diversified Multiple-Factor Index is composed of U.S. large and mid-capitalization stocks that have favorable 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.
Operating expenses on an annual basis are 0.08% for LRGF, making it one of the least expensive products in the space.
LRGF's 12-month trailing dividend yield is 1.26%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
For LRGF, it has heaviest allocation in the Information Technology sector --about 28.90% of the portfolio --while Healthcare and Consumer Discretionary round out the top three.
When you look at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 4.49% of the fund's total assets, followed by Microsoft Corp (MSFT - Free Report) and Cisco Systems Inc (CSCO - Free Report) .
The top 10 holdings account for about 25.58% of total assets under management.
Performance and Risk
The ETF has lost about -4.58% and it's up approximately 5.68% so far this year and in the past one year (as of 04/22/2022), respectively. LRGF has traded between $41.07 and $46.80 during this last 52-week period.
LRGF has a beta of 0.98 and standard deviation of 23.40% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 165 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares MSCI USA Multifactor ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
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 $57.23 billion in assets, Vanguard Value ETF has $103.62 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.