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

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The SPDR MSCI USA StrategicFactors ETF (QUS - Free Report) was launched on 04/15/2015, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Large 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.

A good option for investors who believe in market efficiency, market cap weighted indexes offer 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.

These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.

This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.

Fund Sponsor & Index

Because the fund has amassed over $1.45 billion, this makes it one of the larger ETFs in the Style Box - Large Cap Blend. QUS is managed by State Street Global Advisors. Before fees and expenses, this particular fund seeks to match the performance of the MSCI USA Factor Mix A-Series Index.

The MSCI USA Factor Mix A-Series Capped Index seeks to measure the equity market performance of large and mid-cap companies across the U.S. equity market.

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.

With one of the cheaper products in the space, this ETF has annual operating expenses of 0.15%.

QUS's 12-month trailing dividend yield is 1.36%.

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.

This ETF has heaviest allocation in the Information Technology sector - about 25.30% of the portfolio. Financials and Healthcare round out the top three.

Looking at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 3.31% of total assets, followed by Microsoft Corp (MSFT - Free Report) and Meta Platforms Inc Class A (META - Free Report) .

QUS's top 10 holdings account for about 21.77% of its total assets under management.

Performance and Risk

The ETF has added about 22.48% so far this year and was up about 32.59% in the last one year (as of 11/07/2024). In the past 52-week period, it has traded between $122.22 and $160.85.

The fund has a beta of 0.91 and standard deviation of 15.30% for the trailing three-year period, which makes QUS a medium risk choice in this particular space. With about 597 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 $560.87 billion in assets, SPDR S&P 500 ETF has $612.50 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.

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