ETF Spotlight: Quality U.S. Company Exposure | ETF Trends

ETF Spotlight on the iShares MSCI USA Quality Factor ETF (NYSEArca: QUAL), part of an ongoing series.

Assets: $275.7 million

Objective: The iShares MSCI USA Quality Factor fund tries to reflect the performance of the MSCI USA Quality Index, which selects large- and mid-cap stocks in the U.S. equity market based on three factors: return on equity, earnings variability and debt=to-equity.

Holdings: Top holdings include Apple (NasdaqGS: AAPL) 5.2%, Google (NasdaqGS: GOOG) 5.2%, Exxon Mobil (NYSE: XOM) 5.2%, Johnson & Johnson (NYSE: JNJ) 5.8% and Microsoft (NasdaqGS: MSFT) 4.7%.

What You Should Know:

  • BlacRock’s iShares sponsors the fund.
  • QUAL has a 0.15% expense ratio.
  • The ETF has 125 components, and the top ten holdings make up 39.4% of the overall portfolio.
  • Market capitalization break down includes mega-caps 57.1%, large-caps 33.0% and mid-caps 9.9%.
  • Due to the underlying index’s quality factor, large stocks, with high quality scores, tend to make up a larger portion of the portfolio.
  • Top sector allocations include information technology 35.2%, consumer discretionary 19.5%, health care 16.0%, industrials 8.8% and energy 7.6%.
  • The fund comes with a 1.5% 30-day SEC yield.
  • QUAL began trading July 16, 2013.
  • The ETF has gained about 12.3% since inception.
  • “One of the biggest advantages of this strategy is the inclusion of a subset of companies with strong balance sheet characteristics,” writes David Fabian of FMD Capital Management.

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