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Is FlexShares US Quality Large Cap ETF (QLC) a Strong ETF Right Now?
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A smart beta exchange traded fund, the FlexShares US Quality Large Cap ETF (QLC - Free Report) debuted on 09/23/2015, and offers 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.
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.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
QLC is managed by Flexshares, and this fund has amassed over $350.15 million, which makes it one of the average sized ETFs in the Style Box - Large Cap Blend. QLC, before fees and expenses, seeks to match the performance of the Northern Trust Quality Large Cap Index.
The Northern Trust Quality Large Cap Index is designed to measure the performance of a universe of large capitalization securities which demonstrate characteristics of better quality, attractive valuation and positive momentum.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.25%.
It has a 12-month trailing dividend yield of 0.93%.
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.
This ETF has heaviest allocation in the Information Technology sector - about 32.60% of the portfolio. Financials and Telecom round out the top three.
Taking into account individual holdings, Apple Inc Common Stock Usd 0.00001 (AAPL - Free Report) accounts for about 7.78% of the fund's total assets, followed by Nvidia Corp Common Stock Usd 0.001 (NVDA - Free Report) and Microsoft Corp Common Stock Usd 0.00000625 (MSFT - Free Report) .
The top 10 holdings account for about 34.62% of total assets under management.
Performance and Risk
Year-to-date, the FlexShares US Quality Large Cap ETF return is roughly 29.09% so far, and is up about 39.15% over the last 12 months (as of 11/12/2024). QLC has traded between $49.20 and $67.95 in this past 52-week period.
The ETF has a beta of 1 and standard deviation of 17.36% for the trailing three-year period, making it a medium risk choice in the space. With about 167 holdings, it effectively diversifies company-specific risk.
Alternatives
FlexShares US Quality Large Cap ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. There are other ETFs in the space which investors could consider as well.
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 $567.09 billion in assets, SPDR S&P 500 ETF has $627 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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Is FlexShares US Quality Large Cap ETF (QLC) a Strong ETF Right Now?
A smart beta exchange traded fund, the FlexShares US Quality Large Cap ETF (QLC - Free Report) debuted on 09/23/2015, and offers 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.
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.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
QLC is managed by Flexshares, and this fund has amassed over $350.15 million, which makes it one of the average sized ETFs in the Style Box - Large Cap Blend. QLC, before fees and expenses, seeks to match the performance of the Northern Trust Quality Large Cap Index.
The Northern Trust Quality Large Cap Index is designed to measure the performance of a universe of large capitalization securities which demonstrate characteristics of better quality, attractive valuation and positive momentum.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.25%.
It has a 12-month trailing dividend yield of 0.93%.
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.
This ETF has heaviest allocation in the Information Technology sector - about 32.60% of the portfolio. Financials and Telecom round out the top three.
Taking into account individual holdings, Apple Inc Common Stock Usd 0.00001 (AAPL - Free Report) accounts for about 7.78% of the fund's total assets, followed by Nvidia Corp Common Stock Usd 0.001 (NVDA - Free Report) and Microsoft Corp Common Stock Usd 0.00000625 (MSFT - Free Report) .
The top 10 holdings account for about 34.62% of total assets under management.
Performance and Risk
Year-to-date, the FlexShares US Quality Large Cap ETF return is roughly 29.09% so far, and is up about 39.15% over the last 12 months (as of 11/12/2024). QLC has traded between $49.20 and $67.95 in this past 52-week period.
The ETF has a beta of 1 and standard deviation of 17.36% for the trailing three-year period, making it a medium risk choice in the space. With about 167 holdings, it effectively diversifies company-specific risk.
Alternatives
FlexShares US Quality Large Cap ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. There are other ETFs in the space which investors could consider as well.
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 $567.09 billion in assets, SPDR S&P 500 ETF has $627 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.