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Is FlexShares US Quality Large Cap ETF (QLC) a Strong ETF Right Now?
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The FlexShares US Quality Large Cap ETF (QLC - Free Report) was launched on 09/23/2015, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Large Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is sponsored by Flexshares. It has amassed assets over $227.41 million, making it one of the average sized ETFs in the Style Box - Large Cap Blend. QLC, before fees and expenses, seeks to match the performance of the Northern Trust Quality Large Cap Index.
The Northern Trust Quality Large Cap Index is designed to measure the performance of a universe of large capitalization securities which demonstrate characteristics of better quality, attractive valuation and positive momentum.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.25% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.03%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
QLC's heaviest allocation is in the Information Technology sector, which is about 31.80% of the portfolio. Its Financials and Healthcare round out the top three.
When you look at individual holdings, Apple Inc Common Stock Usd 0.00001 (AAPL - Free Report) accounts for about 7.48% of the fund's total assets, followed by Nvidia Corp Common Stock Usd 0.001 (NVDA - Free Report) and Microsoft Corp Common Stock Usd 0.00000625 (MSFT - Free Report) .
Its top 10 holdings account for approximately 34.89% of QLC's total assets under management.
Performance and Risk
The ETF has added roughly 20.22% and is up about 31.70% so far this year and in the past one year (as of 07/11/2024), respectively. QLC has traded between $45.83 and $63.39 during this last 52-week period.
QLC has a beta of 1.01 and standard deviation of 16.95% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 170 holdings, it effectively diversifies company-specific risk.
Alternatives
FlexShares US Quality Large Cap ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. There are other ETFs in the space which investors could consider as well.
IShares Core S&P 500 ETF (IVV - Free Report) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY - Free Report) tracks S&P 500 Index. IShares Core S&P 500 ETF has $507.09 billion in assets, SPDR S&P 500 ETF has $549.61 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Blend.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Is FlexShares US Quality Large Cap ETF (QLC) a Strong ETF Right Now?
The FlexShares US Quality Large Cap ETF (QLC - Free Report) was launched on 09/23/2015, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Large Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is sponsored by Flexshares. It has amassed assets over $227.41 million, making it one of the average sized ETFs in the Style Box - Large Cap Blend. QLC, before fees and expenses, seeks to match the performance of the Northern Trust Quality Large Cap Index.
The Northern Trust Quality Large Cap Index is designed to measure the performance of a universe of large capitalization securities which demonstrate characteristics of better quality, attractive valuation and positive momentum.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.25% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.03%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
QLC's heaviest allocation is in the Information Technology sector, which is about 31.80% of the portfolio. Its Financials and Healthcare round out the top three.
When you look at individual holdings, Apple Inc Common Stock Usd 0.00001 (AAPL - Free Report) accounts for about 7.48% of the fund's total assets, followed by Nvidia Corp Common Stock Usd 0.001 (NVDA - Free Report) and Microsoft Corp Common Stock Usd 0.00000625 (MSFT - Free Report) .
Its top 10 holdings account for approximately 34.89% of QLC's total assets under management.
Performance and Risk
The ETF has added roughly 20.22% and is up about 31.70% so far this year and in the past one year (as of 07/11/2024), respectively. QLC has traded between $45.83 and $63.39 during this last 52-week period.
QLC has a beta of 1.01 and standard deviation of 16.95% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 170 holdings, it effectively diversifies company-specific risk.
Alternatives
FlexShares US Quality Large Cap ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. There are other ETFs in the space which investors could consider as well.
IShares Core S&P 500 ETF (IVV - Free Report) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY - Free Report) tracks S&P 500 Index. IShares Core S&P 500 ETF has $507.09 billion in assets, SPDR S&P 500 ETF has $549.61 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Blend.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.