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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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track 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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is sponsored by Blackrock. It has amassed assets over $48.59 billion, making it one of the largest ETFs in the Style Box - All Cap Blend. Before fees and expenses, this particular fund 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
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.
Annual operating expenses for QUAL are 0.15%, which makes it one of the cheaper products in the space.
QUAL's 12-month trailing dividend yield is 1.07%.
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 29.90% of the portfolio. Financials and Consumer Discretionary round out the top three.
Looking at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 6.37% of total assets, followed by Microsoft Corp (MSFT - Free Report) and Visa Inc Class A (V - Free Report) .
Its top 10 holdings account for approximately 41.11% of QUAL's total assets under management.
Performance and Risk
So far this year, QUAL has lost about -4.30%, and was up about 6.52% in the last one year (as of 05/07/2025). During this past 52-week period, the fund has traded between $152.42 and $186.85.
The fund has a beta of 1.05 and standard deviation of 18.34% for the trailing three-year period, which makes QUAL a medium risk choice in this particular space. With about 127 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 $64.82 billion in assets, Vanguard Total Stock Market ETF has $448.42 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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track 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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is sponsored by Blackrock. It has amassed assets over $48.59 billion, making it one of the largest ETFs in the Style Box - All Cap Blend. Before fees and expenses, this particular fund 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
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.
Annual operating expenses for QUAL are 0.15%, which makes it one of the cheaper products in the space.
QUAL's 12-month trailing dividend yield is 1.07%.
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 29.90% of the portfolio. Financials and Consumer Discretionary round out the top three.
Looking at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 6.37% of total assets, followed by Microsoft Corp (MSFT - Free Report) and Visa Inc Class A (V - Free Report) .
Its top 10 holdings account for approximately 41.11% of QUAL's total assets under management.
Performance and Risk
So far this year, QUAL has lost about -4.30%, and was up about 6.52% in the last one year (as of 05/07/2025). During this past 52-week period, the fund has traded between $152.42 and $186.85.
The fund has a beta of 1.05 and standard deviation of 18.34% for the trailing three-year period, which makes QUAL a medium risk choice in this particular space. With about 127 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 $64.82 billion in assets, Vanguard Total Stock Market ETF has $448.42 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.