Additional institutional usage of smart beta ETFs will provide ongoing liquidity for all investors, helping to keep the bid/ask spreads tight for these non-market-cap weighted ETFs. At the end of March, insurance provider Transamerica launched three new variable investment options that held a series of BlackRock’s iShares smart beta ETFs.
QUAL is constructed based on a broad U.S. MSCI index by screening for companies with high return on equity, stable year-over-year earnings growth and low financial leverage). The ETF ranks favorably to S&P Global Market Intelligence based on multiple risk considerations and cost factors. These include the credit quality of its holdings and its 0.15% expense ratio. QUAL has $2.3 billion in assets, aided by $289 million of net inflows according to etf.com.
USMV, which holds the least volatile stocks in all 10 GICS sectors, also ranks favorably to S&P Global Market Intelligence based on a variety of risk and cost attributes. These include the Quality Ranking of its holdings, its 0.15% expense ratio and penny bid/ask spread. USMV has $12 billion in assets, aided by $3.3 billion of net inflows.
S&P Global Market Intelligence has rankings on approximately 1,100 equity and fixed income ETFs based on a combination of holdings-level analysis and ETF-level attributes. Both QUAL and USMV earn our top ranking of Overweight.
Transamerica has used ETFs for years on its platform that supports mutual fund investors, have a platform that supports mutual fund investors, variable annuity sub accounts and retirement investors.