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) 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 & IndexThe 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 ExpensesExpense 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 HoldingsETFs 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) accounts for about 6.37% of total assets, followed by Microsoft Corp (MSFT) and Visa Inc Class A (V).Its top 10 holdings account for approximately 41.11% of QUAL's total assets under management.Performance and RiskSo 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.AlternativesIShares 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) tracks S&P Total Market Index and the Vanguard Total Stock Market ETF (VTI) 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 LineTo 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.Want key ETF info delivered straight to your inbox?Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report iShares MSCI USA Quality Factor ETF (QUAL): ETF Research Reports Apple Inc. (AAPL): Free Stock Analysis Report Microsoft Corporation (MSFT): Free Stock Analysis Report Visa Inc. (V): Free Stock Analysis Report Vanguard Total Stock Market ETF (VTI): ETF Research Reports iShares Core S&P Total U.S. Stock Market ETF (ITOT): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks