A new ETF that tries to identify high-quality companies uses many of the same investing principles as Warren Buffet.
“Does the newly launched iShares MSCI USA Quality Factor (NYSEArca: QUAL) capture some of Buffett’s essence? I dare say it does. Now, I’m not claiming you’re going to get Buffett-like results by owning this fund. It’s a pale imitation of the real thing,” writes Morningstar ETF analyst Samuel Lee in a commentary posted on the firm’s website Friday. “However, it’s clear that MSCI took its inspiration from all the right places when it devised the index.” [iShares Launches ‘Quality Factor’ ETF]
BlackRock launched QUAL in July. The fund is one of four ETFs the firm has introduced that weight individual companies by economic factors, rather than by market capitalization like most traditional stock benchmarks. [Fundamental ETFs Rising]
So-called fundamentally weighted ETFs are becoming more popular. They focus on dividends, earnings, debt levels and other factors. [Schwab to Launch Its First Fundamentally Weighted ETFs]
Many fundamentally weighted ETFs are designed to outperform traditional equity indices on a risk-adjusted basis. [A Market-Beating Fundamental ETF]
For example, QUAL tracks an index designed by MSCI comprised of large and mid-cap stocks that are selected based on three fundamental factors: return on equity, earnings variability and debt-to-equity. The ETF charges an expense ratio of 0.15%.
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