If you're interested in broad exposure to the Large Cap Value segment of the US equity market, look no further than the iShares Edge MSCI Multifactor USA ETF (LRGF), a passively managed exchange traded fund launched on 04/28/2015.
The fund is sponsored by Blackrock. It has amassed assets over $1.03 B, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Large cap companies usually have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.
Value stocks have lower than average price-to-earnings and price-to-book ratios. They also have lower than average sales and earnings growth rates. While value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value stocks in strong bull markets.
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.20%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.64%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, 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 22.90% of the portfolio. Industrials and Healthcare round out the top three.
Looking at individual holdings, Northrop Grumman Corp (NOC) accounts for about 2.45% of total assets, followed by Accenture Plc Class A (ACN) and Anthem Inc (ANTM).
The top 10 holdings account for about 20.04% of total assets under management.
Performance and Risk
LRGF seeks to match the performance of the MSCI USA Diversified Multiple-Factor Index before fees and expenses. The MSCI USA Diversified Multiple-Factor Index is composed of U.S. large and mid-capitalization stocks that have favourable exposure to target style factors subject to constraints.
The ETF has added about 2.33% so far this year and was up about 18.49% in the last one year (as of 04/18/2018). In the past 52-week period, it has traded between $27.71 and $33.90.
The ETF has a beta of 0.93 and standard deviation of 13.33% for the trailing three-year period, making it a medium risk choice in the space. With about 150 holdings, it effectively diversifies company-specific risk.
IShares Edge MSCI Multifactor USA ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, LRGF is a great option for investors seeking exposure to the Large Cap ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Vanguard Value ETF (VTV) and the iShares Russell 1000 Value ETF (IWD) track a similar index. While Vanguard Value ETF has $36.29 B in assets, iShares Russell 1000 Value ETF has $36.60 B. VTV has an expense ratio of 0.06% and IWD charges 0.20%.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also 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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Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
VIPERS-VALUE (VTV): ETF Research Reports
ISHARS-FS LC&MC (LRGF): ETF Research Reports
ISHARS-RS 1K VL (IWD): ETF Research Reports
Anthem, Inc. (ANTM) : Free Stock Analysis Report
Accenture PLC (ACN) : Free Stock Analysis Report
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