Principal launched a cheap way for ETF investors to gain exposure to some of the largest U.S. companies on the market.
On Thursday, Principal added the Principal U.S. Mega-Cap Multi-Factor Index ETF (NasdaqGM: USMC). USMC comes with a 0.12% expense ratio.
The new U.S. Mega-Cap Multi-Factor Index ETF tries to reflect the performance of the Nasdaq U.S. Mega Cap Select Leaders Index, which is comprised of companies with the largest market capitalization taken from the Nasdaq U.S. 500 Large Cap Index and screened based on a quantitative model.
“With their global scale and strong brand recognition, mega-cap companies tend to retain the potential to deliver long-term growth to investors when other companies may not,” according to Principal.
The mega-cap companies are taken from the top 50th percentile from the Nasdaq U.S. 500 Large Cap Index. As of September 22, the market capitalization range of companies in the index was between approximately $83.9 billion and $784.6 billion.
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Furthermore, USMC’s underlying index utilizes a modified equal-dollar weighting methodology where securities in the top 10% of aggregate market capitalization are weighted by market-cap, but the remaining securities are equally weighted and volatility adjusted to give a higher tilt toward those that are more liquid and less volatile.
“The Fund has the potential to provide investors a systematic tilt toward lower historical volatility seeking to provide more stability and better downside protection; a highly focused, yet risk-aware, exposure to mega-cap stocks with the potential for better risk-adjusted returns,” according to Principal.
Top holdings include Apple (NasdaqGS: AAPL) 3.6%, McDonalds (NYSE: MCD) 3.3%, Honeywell International (NYSE: HON) 3.0%, 3M Co. (NYSE: MMM) 2.9% and Home Depot (NYSE: HD) 2.9%.
The portfolio includes a combination of well-known brands among the blue chip names with a strong balance sheets and a long history.
For more information on new fund products, visit our new ETFs category.