A smart beta exchange traded fund, the SPDR MSCI USA StrategicFactors ETF (QUS) debuted on 04/15/2015, and offers broad exposure to the Style Box - Large Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by State Street Global Advisors. QUS has been able to amass assets over $917.83 million, making it one of the larger ETFs in the Style Box - Large Cap Blend. This particular fund, before fees and expenses, seeks to match the performance of the MSCI USA Factor Mix A-Series Index.
The MSCI USA Factor Mix A-Series Index measures the equity market performance of large and mid-cap companies across the U.S. equity market. It aims to represent the performance of a combination of three factors: value, quality, and low volatility.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.15% for QUS, making it one of the least expensive products in the space.
QUS's 12-month trailing dividend yield is 1.54%.
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.
For QUS, it has heaviest allocation in the Information Technology sector --about 26.40% of the portfolio --while Healthcare and Financials round out the top three.
When you look at individual holdings, Microsoft Corporation (MSFT) accounts for about 2.93% of the fund's total assets, followed by Apple Inc. (AAPL) and Johnson & Johnson (JNJ).
QUS's top 10 holdings account for about 18.32% of its total assets under management.
Performance and Risk
Year-to-date, the SPDR MSCI USA StrategicFactors ETF has gained about 13.93% so far, and is up roughly 39.57% over the last 12 months (as of 05/11/2021). QUS has traded between $82.11 and $117.97 in this past 52-week period.
The fund has a beta of 0.92 and standard deviation of 22.10% for the trailing three-year period, which makes QUS a medium risk choice in this particular space. With about 621 holdings, it effectively diversifies company-specific risk.
SPDR MSCI USA StrategicFactors ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P 500 ETF (IVV) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY) tracks S&P 500 Index. IShares Core S&P 500 ETF has $279.28 billion in assets, SPDR S&P 500 ETF has $363.95 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.
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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SPDR-MSCI US SF (QUS): ETF Research Reports
Microsoft Corporation (MSFT) : Free Stock Analysis Report
Johnson & Johnson (JNJ) : Free Stock Analysis Report
Apple Inc. (AAPL) : Free Stock Analysis Report
SPDR-SP 500 TR (SPY): ETF Research Reports
ISHARS-SP500 (IVV): ETF Research Reports
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