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Is iShares MSCI USA Equal Weighted ETF (EUSA) a Strong ETF Right Now?
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Designed to provide broad exposure to the Style Box - All Cap Blend category of the market, the iShares MSCI USA Equal Weighted ETF (EUSA - Free Report) is a smart beta exchange traded fund launched on 05/05/2010.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
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.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Managed by Blackrock, EUSA has amassed assets over $228.54 M, making it one of the average sized ETFs in the Style Box - All Cap Blend. This particular fund seeks to match the performance of the MSCI USA Equal Weighted Index before fees and expenses.
The MSCI USA Equal Weighted Index represents the MSCI USA Index, measures the performance of equity securities in the top 85% by market capitalization of equity securities listed on stock exchanges in the United States.
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.
Operating expenses on an annual basis are 0.15% for EUSA, making it one of the cheaper products in the space.
It's 12-month trailing dividend yield comes in at 1.82%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For EUSA, it has heaviest allocation in the Information Technology sector --about 15.50% of the portfolio --while Financials and Industrials round out the top three.
When you look at individual holdings, Dominion Energy Inc (D - Free Report) accounts for about 0.32% of the fund's total assets, followed by Cigna Corp (CI - Free Report) and First Data Corp Class A .
The top 10 holdings account for about 2.22% of total assets under management.
Performance and Risk
The ETF has gained about 10.62% and is down about -3.24% so far this year and in the past one year (as of 02/01/2019), respectively. EUSA has traded between $47.02 and $59.92 during this last 52-week period.
The ETF has a beta of 1.07 and standard deviation of 12.70% for the trailing three-year period, making it a medium risk choice in the space. With about 622 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares MSCI USA Equal Weighted 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 $16.70 B in assets, Vanguard Total Stock Market ETF has $102.63 B. ITOT has an expense ratio of 0.03% and VTI charges 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 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 Equal Weighted ETF (EUSA) a Strong ETF Right Now?
Designed to provide broad exposure to the Style Box - All Cap Blend category of the market, the iShares MSCI USA Equal Weighted ETF (EUSA - Free Report) is a smart beta exchange traded fund launched on 05/05/2010.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
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.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Managed by Blackrock, EUSA has amassed assets over $228.54 M, making it one of the average sized ETFs in the Style Box - All Cap Blend. This particular fund seeks to match the performance of the MSCI USA Equal Weighted Index before fees and expenses.
The MSCI USA Equal Weighted Index represents the MSCI USA Index, measures the performance of equity securities in the top 85% by market capitalization of equity securities listed on stock exchanges in the United States.
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.
Operating expenses on an annual basis are 0.15% for EUSA, making it one of the cheaper products in the space.
It's 12-month trailing dividend yield comes in at 1.82%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For EUSA, it has heaviest allocation in the Information Technology sector --about 15.50% of the portfolio --while Financials and Industrials round out the top three.
When you look at individual holdings, Dominion Energy Inc (D - Free Report) accounts for about 0.32% of the fund's total assets, followed by Cigna Corp (CI - Free Report) and First Data Corp Class A .
The top 10 holdings account for about 2.22% of total assets under management.
Performance and Risk
The ETF has gained about 10.62% and is down about -3.24% so far this year and in the past one year (as of 02/01/2019), respectively. EUSA has traded between $47.02 and $59.92 during this last 52-week period.
The ETF has a beta of 1.07 and standard deviation of 12.70% for the trailing three-year period, making it a medium risk choice in the space. With about 622 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares MSCI USA Equal Weighted 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 $16.70 B in assets, Vanguard Total Stock Market ETF has $102.63 B. ITOT has an expense ratio of 0.03% and VTI charges 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 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.