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.
Next page: The latest news
The Latest News:
- U.S. stocks have broken through to record highs as the economy recovers.
- “The stock market is energized by the stronger macro trends that we’re seeing,” Jim Russell, a senior equity strategist for U.S. Bank Wealth Management, said in a Bloomberg article. “The fundamentals are filling in for a market that has been primarily Fed-driven. We think that is a healthy and sustainable development that has some momentum into 2014.”
- While Fed tapering and rising rates are potential headwinds, the U.S. equities market is still gaining momentum as traders focus on better economic data.
- “The U.S. is doing better, the recovery is there,” Stephane Ekolo, a strategist at Market Securities, said in the Bloomberg article. “We’ve been playing the tapering news for some time, but the market has come to terms with the fact that it is a minor withdrawal of stimulus, and that in any case it means the economy is doing better. It is a good sign.”
iShares MSCI USA Quality Factor ETF
For past stories in this series, visit our ETF Spotlight category.
Max Chen contributed to this article.