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

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A smart beta exchange traded fund, the iShares MSCI USA Quality GARP ETF (GARP - Free Report) debuted on 01/14/2020, and offers broad exposure to the Style Box - All Cap Growth 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.

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.

But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.

By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.

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

The fund is managed by Blackrock, and has been able to amass over $1.2 billion, which makes it one of the larger 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

For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.

Annual operating expenses for GARP are 0.15%, which makes it one of the least expensive products in the space.

It's 12-month trailing dividend yield comes in at 0.32%.

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.

Representing 52.4% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Telecom and Financials round out the top three.

Taking into account individual holdings, Lam Research Corp (LRCX) accounts for about 5.58% of the fund's total assets, followed by Apple Inc (AAPL) and Broadcom Inc (AVGO).

GARP's top 10 holdings account for about 44.6% of its total assets under management.

Performance and Risk

The ETF has added about 23.86% so far this year and was up about 29.01% in the last one year (as of 10/30/2025). In the past 52-week period, it has traded between $45.13 and $69.52

The ETF has a beta of 1.14 and standard deviation of 23.60% for the trailing three-year period. With about 134 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 $3.17 billion in assets, iShares Core S&P U.S. Growth ETF has $26.39 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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