The actively managed iShares Enhanced U.S. Large-Cap ETF (NYSEArca: IELG) provides investors with a low-cost alternative to broad large-cap exposure, focusing on quality companies with a value tilt.

“The value premium has historically worked the best among smaller-cap stocks; therefore, combining size with value is a reasonable approach,” according to Morningstar analyst Alex Bryan.

IELG tries to generate competitive long-term risk-adjusted returns relative to broad U.S. large-caps by selecting stocks based on a combination of quality, value and size factors. Peter Christiansen, Matthew Goff, Jennifer Hsui, Daniel Morillo and Greg Savage manage the investment portfolio.

Specifically, the fund managers determine quality through earnings stability, low debt/capital ratio and earnings accruals, or stocks that exhibit high operating cash flow relative to net income. [Stock ETFs to Weather Market Volatility]

The active ETF shows a price-to-earnings ratio of 15.8 and a price-to-book of 2.0. In comparison, the S&P 500 index has a 17.4 P/E and a 2.4 P/B.

“Putting quality and value together is also a prudent approach because it may help the fund reduce its exposure to value traps, which are stocks that look cheap but may become cheaper,” Bryan added. “It may also help the fund avoid overpaying for quality.” [More Financial Advisors Using ETFs for Core Holdings]

Due to the ETF’s selection methodology, it also includes a small 9% allocation toward small-caps, along with mega-caps 27.0%, large-caps 40.5% and mid-caps 23.4%.