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Is iShares U.S. Equity Factor ETF (LRGF) a Strong ETF Right Now?
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A smart beta exchange traded fund, the iShares U.S. Equity Factor ETF (LRGF - Free Report) debuted on 04/28/2015, and offers broad exposure to the Style Box - All Cap Value category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
LRGF is managed by Blackrock, and this fund has amassed over $1.08 billion, which makes it one of the largest ETFs in the Style Box - All Cap Value. This particular fund seeks to match the performance of the MSCI USA Diversified Multiple-Factor Index before fees and expenses.
The STOXX U.S. Equity Factor Index composes 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 0.08%, making it one of the least expensive products in the space.
The fund has a 12-month trailing dividend yield of 1.75%.
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.
Representing 27.80% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Healthcare and Financials round out the top three.
Taking into account individual holdings, Apple Inc (AAPL - Free Report) accounts for about 6.62% of the fund's total assets, followed by Microsoft Corp (MSFT - Free Report) and Amazon Com Inc (AMZN - Free Report) .
LRGF's top 10 holdings account for about 23.12% of its total assets under management.
Performance and Risk
Year-to-date, the iShares U.S. Equity Factor ETF has lost about -15.06% so far, and is down about -11.22% over the last 12 months (as of 10/26/2022). LRGF has traded between $36.22 and $46.80 in this past 52-week period.
The fund has a beta of 0.97 and standard deviation of 25.13% for the trailing three-year period, which makes LRGF a medium risk choice in this particular space. With about 311 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares U.S. Equity Factor ETF is an excellent option for investors seeking to outperform the Style Box - All Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
Dimensional U.S. Targeted Value ETF (DFAT - Free Report) tracks ---------------------------------------- and the iShares Core S&P U.S. Value ETF (IUSV - Free Report) tracks S&P 900 Value Index. Dimensional U.S. Targeted Value ETF has $7.10 billion in assets, iShares Core S&P U.S. Value ETF has $11.77 billion. DFAT has an expense ratio of 0.29% and IUSV 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 - All 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.
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Is iShares U.S. Equity Factor ETF (LRGF) a Strong ETF Right Now?
A smart beta exchange traded fund, the iShares U.S. Equity Factor ETF (LRGF - Free Report) debuted on 04/28/2015, and offers broad exposure to the Style Box - All Cap Value category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
LRGF is managed by Blackrock, and this fund has amassed over $1.08 billion, which makes it one of the largest ETFs in the Style Box - All Cap Value. This particular fund seeks to match the performance of the MSCI USA Diversified Multiple-Factor Index before fees and expenses.
The STOXX U.S. Equity Factor Index composes 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 0.08%, making it one of the least expensive products in the space.
The fund has a 12-month trailing dividend yield of 1.75%.
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.
Representing 27.80% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Healthcare and Financials round out the top three.
Taking into account individual holdings, Apple Inc (AAPL - Free Report) accounts for about 6.62% of the fund's total assets, followed by Microsoft Corp (MSFT - Free Report) and Amazon Com Inc (AMZN - Free Report) .
LRGF's top 10 holdings account for about 23.12% of its total assets under management.
Performance and Risk
Year-to-date, the iShares U.S. Equity Factor ETF has lost about -15.06% so far, and is down about -11.22% over the last 12 months (as of 10/26/2022). LRGF has traded between $36.22 and $46.80 in this past 52-week period.
The fund has a beta of 0.97 and standard deviation of 25.13% for the trailing three-year period, which makes LRGF a medium risk choice in this particular space. With about 311 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares U.S. Equity Factor ETF is an excellent option for investors seeking to outperform the Style Box - All Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
Dimensional U.S. Targeted Value ETF (DFAT - Free Report) tracks ---------------------------------------- and the iShares Core S&P U.S. Value ETF (IUSV - Free Report) tracks S&P 900 Value Index. Dimensional U.S. Targeted Value ETF has $7.10 billion in assets, iShares Core S&P U.S. Value ETF has $11.77 billion. DFAT has an expense ratio of 0.29% and IUSV 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 - All 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.