Back to top

Image: Bigstock

Is SPDR MSCI USA StrategicFactors ETF (QUS) a Strong ETF Right Now?

Read MoreHide Full Article

Making its debut on 04/15/2015, smart beta exchange traded fund SPDR MSCI USA StrategicFactors ETF (QUS - Free Report) provides investors broad exposure to the Style Box - Large Cap Blend category of the market.

What Are Smart Beta ETFs?

For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.

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.

If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.

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.

Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.

Fund Sponsor & Index

Managed by State Street Global Advisors, QUS has amassed assets over $960.29 million, making it one of the larger ETFs in the Style Box - Large Cap Blend. This particular fund seeks to match the performance of the MSCI USA Factor Mix A-Series Index before fees and expenses.

The MSCI USA Factor Mix A-Series Index measures the equity market performance of large and mid-cap companies across the U.S. equity market. It aims to represent the performance of a combination of three factors: value, quality, and low volatility.

Cost & Other Expenses

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

Annual operating expenses for QUS are 0.15%, which makes it one of the cheaper products in the space.

The fund has a 12-month trailing dividend yield of 1.59%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

For QUS, it has heaviest allocation in the Information Technology sector --about 21.90% of the portfolio --while Healthcare and Financials round out the top three.

Looking at individual holdings, Microsoft Corporation (MSFT - Free Report) accounts for about 2.94% of total assets, followed by Apple Inc. (AAPL - Free Report) and Unitedhealth Group Incorporated (UNH - Free Report) .

Its top 10 holdings account for approximately 20.39% of QUS's total assets under management.

Performance and Risk

The ETF has gained about 5.65% and is down about -5.22% so far this year and in the past one year (as of 04/11/2023), respectively. QUS has traded between $101.25 and $124.45 during this last 52-week period.

The ETF has a beta of 0.92 and standard deviation of 17.65% for the trailing three-year period, making it a medium risk choice in the space. With about 627 holdings, it effectively diversifies company-specific risk.

Alternatives

SPDR MSCI USA StrategicFactors ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.

IShares Core S&P 500 ETF (IVV - Free Report) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY - Free Report) tracks S&P 500 Index. IShares Core S&P 500 ETF has $305.68 billion in assets, SPDR S&P 500 ETF has $371.22 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.

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 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.

Published in