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Is iShares MSCI USA Equal Weighted ETF (EUSA) a Strong ETF Right Now?
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The iShares MSCI USA Equal Weighted ETF (EUSA - Free Report) was launched on 05/05/2010, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - All Cap Blend 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
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.
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
The fund is managed by Blackrock. EUSA has been able to amass assets over $729.28 million, making it one of the average sized ETFs in the Style Box - All Cap Blend. EUSA seeks to match the performance of the MSCI USA Equal Weighted Index before fees and expenses.
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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
With one of the least expensive products in the space, this ETF has annual operating expenses of 0.09%.
EUSA's 12-month trailing dividend yield is 1.46%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, 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; Industrials and Financials round out the top three.
Looking at individual holdings, Super Micro Computer Inc (SMCI - Free Report) accounts for about 0.39% of total assets, followed by Broadcom Inc (AVGO - Free Report) and Confluent Inc Class A (CFLT - Free Report) .
The top 10 holdings account for about 2.64% of total assets under management.
Performance and Risk
The ETF return is roughly 5.33% and it's up approximately 23.89% so far this year and in the past one year (as of 03/12/2024), respectively. EUSA has traded between $70.68 and $89 during this last 52-week period.
EUSA has a beta of 1.09 and standard deviation of 18.02% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 615 holdings, it effectively diversifies company-specific risk.
Alternatives
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 - Free Report) tracks S&P Total Market Index and the Vanguard Total Stock Market ETF (VTI - Free Report) tracks CRSP US Total Market Index. IShares Core S&P Total U.S. Stock Market ETF has $53.23 billion in assets, Vanguard Total Stock Market ETF has $378.17 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.
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 MSCI USA Equal Weighted ETF (EUSA) a Strong ETF Right Now?
The iShares MSCI USA Equal Weighted ETF (EUSA - Free Report) was launched on 05/05/2010, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - All Cap Blend 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
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.
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
The fund is managed by Blackrock. EUSA has been able to amass assets over $729.28 million, making it one of the average sized ETFs in the Style Box - All Cap Blend. EUSA seeks to match the performance of the MSCI USA Equal Weighted Index before fees and expenses.
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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
With one of the least expensive products in the space, this ETF has annual operating expenses of 0.09%.
EUSA's 12-month trailing dividend yield is 1.46%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, 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; Industrials and Financials round out the top three.
Looking at individual holdings, Super Micro Computer Inc (SMCI - Free Report) accounts for about 0.39% of total assets, followed by Broadcom Inc (AVGO - Free Report) and Confluent Inc Class A (CFLT - Free Report) .
The top 10 holdings account for about 2.64% of total assets under management.
Performance and Risk
The ETF return is roughly 5.33% and it's up approximately 23.89% so far this year and in the past one year (as of 03/12/2024), respectively. EUSA has traded between $70.68 and $89 during this last 52-week period.
EUSA has a beta of 1.09 and standard deviation of 18.02% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 615 holdings, it effectively diversifies company-specific risk.
Alternatives
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 - Free Report) tracks S&P Total Market Index and the Vanguard Total Stock Market ETF (VTI - Free Report) tracks CRSP US Total Market Index. IShares Core S&P Total U.S. Stock Market ETF has $53.23 billion in assets, Vanguard Total Stock Market ETF has $378.17 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.
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.