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Is FlexShares US Quality Large Cap ETF (QLC) a Strong ETF Right Now?
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Making its debut on 09/23/2015, smart beta exchange traded fund FlexShares US Quality Large Cap ETF (QLC - Free Report) provides investors broad exposure to the Style Box - Large Cap Blend category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Managed by Flexshares, QLC has amassed assets over $224.44 million, making it one of the average sized ETFs in the Style Box - Large Cap Blend. This particular fund seeks to match the performance of the Northern Trust Quality Large Cap Index before fees and expenses.
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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.25%.
QLC's 12-month trailing dividend yield is 1.05%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 33.40% of the portfolio, the fund has heaviest allocation to the Financials sector; Information Technology and Healthcare round out the top three.
Looking at individual holdings, Apple Inc Common Stock Usd 0.00001 (AAPL - Free Report) accounts for about 8.19% of 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) .
The top 10 holdings account for about 34.58% of total assets under management.
Performance and Risk
The ETF has added about 17.27% so far this year and is up about 26.10% in the last one year (as of 09/11/2024). In the past 52-week period, it has traded between $45.83 and $64.08.
The ETF has a beta of 1 and standard deviation of 17.34% for the trailing three-year period, making it 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 $509.13 billion in assets, SPDR S&P 500 ETF has $547.52 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?
Making its debut on 09/23/2015, smart beta exchange traded fund FlexShares US Quality Large Cap ETF (QLC - Free Report) provides investors broad exposure to the Style Box - Large Cap Blend category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Managed by Flexshares, QLC has amassed assets over $224.44 million, making it one of the average sized ETFs in the Style Box - Large Cap Blend. This particular fund seeks to match the performance of the Northern Trust Quality Large Cap Index before fees and expenses.
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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.25%.
QLC's 12-month trailing dividend yield is 1.05%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 33.40% of the portfolio, the fund has heaviest allocation to the Financials sector; Information Technology and Healthcare round out the top three.
Looking at individual holdings, Apple Inc Common Stock Usd 0.00001 (AAPL - Free Report) accounts for about 8.19% of 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) .
The top 10 holdings account for about 34.58% of total assets under management.
Performance and Risk
The ETF has added about 17.27% so far this year and is up about 26.10% in the last one year (as of 09/11/2024). In the past 52-week period, it has traded between $45.83 and $64.08.
The ETF has a beta of 1 and standard deviation of 17.34% for the trailing three-year period, making it 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 $509.13 billion in assets, SPDR S&P 500 ETF has $547.52 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.