Designed to provide broad exposure to the Style Box - All Cap Blend category of the market, the iShares MSCI USA Equal Weighted ETF (EUSA) is a smart beta exchange traded fund launched on 05/05/2010.
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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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 & Index
The fund is managed by Blackrock. EUSA has been able to amass assets over $369.99 M, making it one of the larger ETFs in the Style Box - All Cap Blend. Before fees and expenses, this particular fund seeks to match the performance of the MSCI USA Equal Weighted Index.
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
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.
Operating expenses on an annual basis are 0.15% for EUSA, making it one of the cheaper products in the space.
EUSA's 12-month trailing dividend yield is 1.45%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
Representing 16.70% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Financials and Industrials round out the top three.
When you look at individual holdings, Viacomcbs Inc Class B (VIAC) accounts for about 0.33% of the fund's total assets, followed by Truist Financial Corp (TFC) and Bristol Myers Squibb (BMY).
The top 10 holdings account for about 2.25% of total assets under management.
Performance and Risk
So far this year, EUSA has added about 3.25%, and it's up approximately 19.05% in the last one year (as of 02/13/2020). During this past 52-week period, the fund has traded between $55.52 and $66.05.
The ETF has a beta of 1.07 and standard deviation of 12.50% for the trailing three-year period, making it a medium risk choice in the space. With about 643 holdings, it effectively diversifies company-specific risk.
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) 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 $26.30 B in assets, Vanguard Total Stock Market ETF has $144.69 B. 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.
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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iShares MSCI USA Equal Weighted ETF (EUSA): ETF Research Reports
Bristol-Myers Squibb Company (BMY) : 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 Reports
CBS Corporation (VIAC) : Free Stock Analysis Report
BB&T Corporation (TFC) : Free Stock Analysis Report
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