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Should iShares MSCI USA Min Vol Factor ETF (USMV) Be on Your Investing Radar?

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Launched on 10/18/2011, the iShares MSCI USA Min Vol Factor ETF (USMV - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Blend segment of the US equity market.

The fund is sponsored by Blackrock. It has amassed assets over $27.52 billion, making it one of the largest ETFs attempting to match the Large Cap Blend segment of the US equity market.

Why Large Cap Blend

Companies that fall in the large cap category tend to 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 usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.


Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.15%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 1.43%.

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.

This ETF has heaviest allocation to the Information Technology sector--about 21.50% of the portfolio. Healthcare and Consumer Staples round out the top three.

Looking at individual holdings, Vertex Pharmaceuticals Inc (VRTX - Free Report) accounts for about 1.68% of total assets, followed by T Mobile Us Inc (TMUS - Free Report) and Cisco Systems Inc (CSCO - Free Report) .

The top 10 holdings account for about 15.17% of total assets under management.

Performance and Risk

USMV seeks to match the performance of the MSCI USA Minimum Volatility Index before fees and expenses. The MSCI USA Minimum Volatility (USD) Index is composed of U.S. equities that, in the aggregate, have lower volatility characteristics relative to the broader U.S. equity market.

The ETF has lost about -9.95% so far this year and is down about -3.05% in the last one year (as of 07/22/2022). In the past 52-week period, it has traded between $66.73 and $81.04.

The ETF has a beta of 0.75 and standard deviation of 20.69% for the trailing three-year period, making it a medium risk choice in the space. With about 178 holdings, it effectively diversifies company-specific risk.


IShares MSCI USA Min Vol Factor 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, USMV 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 $295.87 billion in assets, SPDR S&P 500 ETF has $360.42 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.


While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

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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