Is IQ U.S. Large Cap ETF (CLRG) a Strong ETF Right Now?
A smart beta exchange traded fund, the IQ U.S. Large Cap ETF (CLRG) debuted on 12/13/2017, and offers broad exposure to the Style Box - Large Cap Blend category of the market.
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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is sponsored by New York Life Investments. It has amassed assets over $254.20 million, making it one of the average sized ETFs in the Style Box - Large Cap Blend. CLRG seeks to match the performance of the NASDAQ CHAIKIN POWER US LARGE CAP INDEX before fees and expenses.
The NASDAQ Chaikin Power US Large Cap Index applies a quantitative multi-factor model that seeks to identify securities that are expected to outperform peers by selecting securities from the Nasdaq US 300 Index.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.25%.
It has a 12-month trailing dividend yield of 1.47%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 21.80% of the portfolio, the fund has heaviest allocation to the Financials sector; Information Technology and Healthcare round out the top three.
When you look at individual holdings, Broadcom Inc (AVGO) accounts for about 1.25% of the fund's total assets, followed by Alphabet Inc-Cl A (GOOGL) and Copart Inc (CPRT).
The top 10 holdings account for about 11.48% of total assets under management.
Performance and Risk
Year-to-date, the IQ U.S. Large Cap ETF return is roughly 5.99% so far, and it's up approximately 6.89% over the last 12 months (as of 09/11/2023). CLRG has traded between $28.38 and $34.10 in this past 52-week period.
CLRG has a beta of 1.04 and standard deviation of 17.25% for the trailing three-year period. With about 101 holdings, it effectively diversifies company-specific risk.
Alternatives
IQ U.S. Large Cap ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P 500 ETF (IVV) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY) tracks S&P 500 Index. IShares Core S&P 500 ETF has $349.60 billion in assets, SPDR S&P 500 ETF has $409.69 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
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 - Large 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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IQ U.S. Large Cap ETF (CLRG): ETF Research Reports
Broadcom Inc. (AVGO) : Free Stock Analysis Report
Copart, Inc. (CPRT) : Free Stock Analysis Report
SPDR S&P 500 ETF (SPY): ETF Research Reports
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
iShares Core S&P 500 ETF (IVV): ETF Research Reports
