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Is iShares MSCI USA Equal Weighted ETF (EUSA) a Hot ETF Right Now?

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Making its debut on 05/05/2010, smart beta exchange traded fund iShares MSCI USA Equal Weighted ETF (EUSA) provides investors broad exposure to the Total Market (U.S.) ETFs 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.

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.

If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking 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.

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 Blackrock. It has amassed assets over $211.01 M, making it one of the average sized ETFs in the Total Market (U.S.) ETFs. Before fees and expenses, EUSA 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

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 cousins, other things remaining the same.

Operating expenses on an annual basis are 0.15% for this ETF, which makes it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 1.73%.

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.

This ETF has heaviest allocation in the Financials sector - about 14.50% of the portfolio. Information Technology and Industrials round out the top three.

Taking into account individual holdings, Marathon Petroleum Corp (MPC) accounts for about 0.24% of the fund's total assets, followed by Red Hat Inc (RHT) and Ulta Beauty Inc (ULTA).

Its top 10 holdings account for approximately 2.16% of EUSA's total assets under management.

Performance and Risk

So far this year, EUSA return is roughly 1.45%, and was up about 3.27% in the last one year (as of 11/30/2018). During this past 52-week period, the fund has traded between $53.05 and $59.92.

The ETF has a beta of 1.01 and standard deviation of 12.30% 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

IShares MSCI USA Equal Weighted ETF is a reasonable option for investors seeking to outperform the Total Market (U.S.) ETFs 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 $15.56 B in assets, Vanguard Total Stock Market ETF has $100.76 B. ITOT has an expense ratio of 0.03% and VTI charges 0.04%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Total Market (U.S.) ETFs.

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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ISHARS-MS USA (EUSA): ETF Research Reports
 
Red Hat, Inc. (RHT) : Free Stock Analysis Report
 
VIPERS-TOT STK (VTI): ETF Research Reports
 
ISHARS-1500 IDX (ITOT): ETF Research Reports
 
Marathon Petroleum Corporation (MPC) : Free Stock Analysis Report
 
Ulta Beauty Inc. (ULTA) : Free Stock Analysis Report
 
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