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Is iShares MSCI USA Quality GARP ETF (GARP) a Strong ETF Right Now?

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Making its debut on 01/14/2020, smart beta exchange traded fund iShares MSCI USA Quality GARP ETF (GARP - Free Report) provides investors broad exposure to the Style Box - All Cap Growth category of the market.

What Are Smart Beta ETFs?

The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.

Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.

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.

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.

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

The fund is managed by Blackrock. GARP has been able to amass assets over $478.18 million, making it one of the average sized ETFs in the Style Box - All Cap Growth. This particular fund, before fees and expenses, seeks to match the performance of the MSCI USA QUALITY GARP SELECT INDEX .

The MSCI USA Quality GARP Select Index composes of U.S. large and mid-capitalization growth stocks exhibiting favourable value and quality characteristics.

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.

Annual operating expenses for this ETF are 0.15%, making it one of the least expensive products in the space.

GARP's 12-month trailing dividend yield is 0.41%.

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.

GARP's heaviest allocation is in the Information Technology sector, which is about 48.8% of the portfolio. Its Consumer Discretionary and Financials round out the top three.

Taking into account individual holdings, Microsoft Corp (MSFT) accounts for about 5.9% of the fund's total assets, followed by Mastercard Inc Class A (MA) and Nvidia Corp (NVDA).

Its top 10 holdings account for approximately 42.23% of GARP's total assets under management.

Performance and Risk

The ETF return is roughly 2.08% and is up roughly 10.83% so far this year and in the past one year (as of 06/23/2025), respectively. GARP has traded between $45.13 and $59.23 during this last 52-week period.

The fund has a beta of 1.14 and standard deviation of 26.07% for the trailing three-year period. With about 136 holdings, it effectively diversifies company-specific risk .

Alternatives

iShares MSCI USA Quality GARP ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.

iShares Morningstar Growth ETF (ILCG) tracks MORNINGSTAR US LARGE-MID CP BRD GRWTH ID and the iShares Core S&P U.S. Growth ETF (IUSG) tracks S&P 900 Growth Index. iShares Morningstar Growth ETF has $2.58 billion in assets, iShares Core S&P U.S. Growth ETF has $22.19 billion. ILCG has an expense ratio of 0.04% and IUSG changes 0.04%.

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 Growth

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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