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Is iShares MSCI USA Equal Weighted ETF (EUSA) a Strong ETF Right Now?
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A smart beta exchange traded fund, the iShares MSCI USA Equal Weighted ETF (EUSA - Free Report) debuted on 05/05/2010, and offers broad exposure to the Style Box - All 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 work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
The fund is managed by Blackrock. EUSA has been able to amass assets over $238.64 M, making it one of the average sized ETFs in the Style Box - All Cap Blend. Before fees and expenses, this particular fund seeks to match the performance of the MSCI USA Equal Weighted Index.
The MSCI USA Equal Weighted Index represents the MSCI USA Index, measures the performance of equity securities in the top 85% by market capitalization of equity securities listed on stock exchanges in the United States.
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 0.15% for EUSA, making it one of the cheaper products in the space.
The fund has a 12-month trailing dividend yield of 1.78%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector - about 16% of the portfolio. Financials and Industrials round out the top three.
When you look at individual holdings, Wayfair Inc Class A (W - Free Report) accounts for about 0.22% of the fund's total assets, followed by Mercadolibre Inc (MELI - Free Report) and Wabco Holdings Inc .
The top 10 holdings account for about 1.89% of total assets under management.
Performance and Risk
Year-to-date, the iShares MSCI USA Equal Weighted ETF has added about 12.78% so far, and is up about 1.38% over the last 12 months (as of 03/08/2019). EUSA has traded between $47.02 and $59.92 in this past 52-week period.
The fund has a beta of 1.07 and standard deviation of 12.08% for the trailing three-year period, which makes EUSA a medium risk choice in this particular space. With about 624 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares MSCI USA Equal Weighted ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P Total U.S. Stock Market ETF (ITOT - Free Report) tracks S&P Total Market Index and the Vanguard Total Stock Market ETF (VTI - Free Report) tracks CRSP US Total Market Index. IShares Core S&P Total U.S. Stock Market ETF has $18.21 B in assets, Vanguard Total Stock Market ETF has $106.32 B. ITOT has an expense ratio of 0.03% and VTI charges 0.04%.
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 - All 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 iShares MSCI USA Equal Weighted ETF (EUSA) a Strong ETF Right Now?
A smart beta exchange traded fund, the iShares MSCI USA Equal Weighted ETF (EUSA - Free Report) debuted on 05/05/2010, and offers broad exposure to the Style Box - All 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 work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
The fund is managed by Blackrock. EUSA has been able to amass assets over $238.64 M, making it one of the average sized ETFs in the Style Box - All Cap Blend. Before fees and expenses, this particular fund seeks to match the performance of the MSCI USA Equal Weighted Index.
The MSCI USA Equal Weighted Index represents the MSCI USA Index, measures the performance of equity securities in the top 85% by market capitalization of equity securities listed on stock exchanges in the United States.
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 0.15% for EUSA, making it one of the cheaper products in the space.
The fund has a 12-month trailing dividend yield of 1.78%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector - about 16% of the portfolio. Financials and Industrials round out the top three.
When you look at individual holdings, Wayfair Inc Class A (W - Free Report) accounts for about 0.22% of the fund's total assets, followed by Mercadolibre Inc (MELI - Free Report) and Wabco Holdings Inc .
The top 10 holdings account for about 1.89% of total assets under management.
Performance and Risk
Year-to-date, the iShares MSCI USA Equal Weighted ETF has added about 12.78% so far, and is up about 1.38% over the last 12 months (as of 03/08/2019). EUSA has traded between $47.02 and $59.92 in this past 52-week period.
The fund has a beta of 1.07 and standard deviation of 12.08% for the trailing three-year period, which makes EUSA a medium risk choice in this particular space. With about 624 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares MSCI USA Equal Weighted ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P Total U.S. Stock Market ETF (ITOT - Free Report) tracks S&P Total Market Index and the Vanguard Total Stock Market ETF (VTI - Free Report) tracks CRSP US Total Market Index. IShares Core S&P Total U.S. Stock Market ETF has $18.21 B in assets, Vanguard Total Stock Market ETF has $106.32 B. ITOT has an expense ratio of 0.03% and VTI charges 0.04%.
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 - All 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.