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Is iShares MSCI USA Quality Factor ETF (QUAL) a Strong ETF Right Now?
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Making its debut on 07/16/2013, smart beta exchange traded fund iShares MSCI USA Quality Factor ETF (QUAL - Free Report) provides investors broad exposure to the Style Box - All Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
QUAL is managed by Blackrock, and this fund has amassed over $50.04 billion, which makes it one of the largest ETFs in the Style Box - All Cap Blend. Before fees and expenses, QUAL seeks to match the performance of the MSCI USA Sector Neutral Quality Index.
The MSCI USA Sector Neutral Quality Index is based on a traditional market capitalization-weighted parent index, the MSCI USA Index which includes U.S. large and mid capitalization stocks.
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.
With one of the cheaper products in the space, this ETF has annual operating expenses of 0.15%.
It has a 12-month trailing dividend yield of 1%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, 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 30% of the portfolio. Financials and Consumer Discretionary round out the top three.
Looking at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 6.30% of total assets, followed by Microsoft Corp (MSFT - Free Report) and Visa Inc Class A (V - Free Report) .
QUAL's top 10 holdings account for about 40.62% of its total assets under management.
Performance and Risk
So far this year, QUAL has added about 1.96%, and was up about 14.41% in the last one year (as of 03/03/2025). During this past 52-week period, the fund has traded between $154.56 and $186.85.
The ETF has a beta of 1.03 and standard deviation of 17.73% for the trailing three-year period, making it a medium risk choice in the space. With about 129 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares MSCI USA Quality Factor 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 $64.68 billion in assets, Vanguard Total Stock Market ETF has $462.42 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 Quality Factor ETF (QUAL) a Strong ETF Right Now?
Making its debut on 07/16/2013, smart beta exchange traded fund iShares MSCI USA Quality Factor ETF (QUAL - Free Report) provides investors broad exposure to the Style Box - All Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
QUAL is managed by Blackrock, and this fund has amassed over $50.04 billion, which makes it one of the largest ETFs in the Style Box - All Cap Blend. Before fees and expenses, QUAL seeks to match the performance of the MSCI USA Sector Neutral Quality Index.
The MSCI USA Sector Neutral Quality Index is based on a traditional market capitalization-weighted parent index, the MSCI USA Index which includes U.S. large and mid capitalization stocks.
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.
With one of the cheaper products in the space, this ETF has annual operating expenses of 0.15%.
It has a 12-month trailing dividend yield of 1%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, 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 30% of the portfolio. Financials and Consumer Discretionary round out the top three.
Looking at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 6.30% of total assets, followed by Microsoft Corp (MSFT - Free Report) and Visa Inc Class A (V - Free Report) .
QUAL's top 10 holdings account for about 40.62% of its total assets under management.
Performance and Risk
So far this year, QUAL has added about 1.96%, and was up about 14.41% in the last one year (as of 03/03/2025). During this past 52-week period, the fund has traded between $154.56 and $186.85.
The ETF has a beta of 1.03 and standard deviation of 17.73% for the trailing three-year period, making it a medium risk choice in the space. With about 129 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares MSCI USA Quality Factor 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 $64.68 billion in assets, Vanguard Total Stock Market ETF has $462.42 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.