State Street’s (NYSE: STT) State Street Global Advisors (SSgA) unit, one of the largest issuers of exchange traded funds, added to its lineup of strategic beta ETFs today with the debut of the SPDR MSCI Quality Mix USA ETF (NYSEArca: QUS).
The new ETF tracks the equally-weighted MSCI USA Quality Mix A-Series Index, which is a combination of the MSCI USA Value Weighted, MSCI USA Minimum Volatility and MSCI USA Quality Indexes. As of Feb. 27, the index was home to 631 large- and mid-cap companies, according to a statement issued by SSgA.
The quality factor has become increasingly among issuers promoting factor-based ETFs. There are now over 40 quality factor ETFs, both U.S. and international, available to U.S. investors. Quality encompasses traits such as dividends, earnings growth, return on equity and balance sheet strength. [Quality ETFs on the Rise]
The quality factor “captures excess returns to stocks that are characterized by low debt, stable earnings growth and other ‘quality’ metrics,” according to MSCI.
Bolstering the case for quality investing, those other metrics include high returns on equity, stable dividend growth, robust cash flow, lack of financial leverage, sturdy balance sheets and strong management, notes MSCI. [Quality With Emerging Markets ETFs]
SSgA and MSCI have partnered on several other quality factor ETFs, including the SPDR MSCI Spain Quality Mix ETF (NYSEArca: QESP) and the SPDR MSCI Australia Quality Mix ETF (NYSEArca: QAUS), as well as the SPDR MSCI EAFE Quality Mix ETF (NYSEArca: QEFA) and SPDR MSCI Emerging Markets Quality Mix ETF (NYSEArca: QEMM).
SSGA’s suite of Quality Mix SPDR ETFs now includes 13 ETFs offering access to developed, emerging, single country and global markets, according to the statement.
QUS is home to 617 stocks with a weighted average market value of $120.4 billion. The new ETF allocates nearly 21% of its weight to the technology sector and 15.7% to healthcare stocks. Consumer discretionary names and financials receive weights of 14% and 13.1%, respectively, according to issuer data.
Eight of QUS’ top 10 holdings are members of the Dow Jones Industrial Average with Gilead Sciences (NasdaqGS: GILD) and Qualcomm (NasdaqGS: QCOM) the outliers. Exxon Mobil (NYSE: XOM) is the new ETF’s largest holding at a weight of 3% followed by Apple (NasdaqGS: AAPL) at almost 2.7%.
QUS charges just 0.15% per year, which is low among smart beta ETFs.
QUS Top 10 Holdings
Table Courtesy: SSgA
ETF Trends editorial team contributed to this article. Tom Lydon’s clients own shares of Apple.