Should SPDR MSCI USA StrategicFactors ETF (QUS) Be on Your Investing Radar?

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If you’re interested in broad exposure to the Large Cap Blend segment of the US equity market, look no further than the SPDR MSCI USA StrategicFactors ETF (QUS), a passively managed exchange traded fund launched on 04/15/2015.

The fund is sponsored by State Street Global Advisors. It has amassed assets over $974.12 million, making it one of the larger ETFs attempting to match the Large Cap Blend segment of the US equity market.

Why Large Cap Blend

Companies that fall in the large cap category tend to have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.

Typically holding a combination of both growth and value stocks, blend ETFs also demonstrate qualities seen in value and growth investments.

Costs

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 counterparts, other things remaining the same.

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

It has a 12-month trailing dividend yield of 1.46%.

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 to the Information Technology sector–about 28.90% of the portfolio. Healthcare and Financials round out the top three.

Looking at individual holdings, Microsoft Corporation (MSFT) accounts for about 3.08% of total assets, followed by Apple Inc. (AAPL) and Johnson & Johnson (JNJ).

The top 10 holdings account for about 20.95% of total assets under management.

Performance and Risk

QUS seeks to match the performance of the MSCI USA Factor Mix A-Series Index before fees and expenses. The MSCI USA Factor Mix A-Series Index measures the equity market performance of large and mid-cap companies across the U.S. equity market. It aims to represent the performance of a combination of three factors: value, quality, and low volatility.

The ETF has added roughly 18.47% so far this year and it’s up approximately 26.64% in the last one year (as of 10/11/2021). In the past 52-week period, it has traded between $91.59 and $126.08.

The ETF has a beta of 0.93 and standard deviation of 22.23% for the trailing three-year period, making it a medium risk choice in the space. With about 625 holdings, it effectively diversifies company-specific risk.

Alternatives

SPDR MSCI USA StrategicFactors ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, QUS is a reasonable option for those seeking exposure to the Style Box – Large Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Core S&P 500 ETF (IVV) and the SPDR S&P 500 ETF (SPY) track a similar index. While iShares Core S&P 500 ETF has $293.05 billion in assets, SPDR S&P 500 ETF has $392.35 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.

Bottom-Line

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

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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SPDR MSCI USA StrategicFactors ETF (QUS): ETF Research Reports
 
Apple Inc. (AAPL) : Free Stock Analysis Report
 
Microsoft Corporation (MSFT) : Free Stock Analysis Report
 
Johnson & Johnson (JNJ) : Free Stock Analysis Report
 
SPDR S&P 500 ETF (SPY): ETF Research Reports
 
iShares Core S&P 500 ETF (IVV): ETF Research Reports
 
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