Subscribe to Entrepreneur for $5
Subscribe

Is iShares MSCI USA Equal Weighted ETF (EUSA) a Strong ETF Right Now?

Smart Beta ETF report for EUSA

By
This story originally appeared on Zacks

Launched on 05/05/2010, the iShares MSCI USA Equal Weighted ETF (EUSA) is a smart beta exchange traded fund offering broad exposure to the Style Box - All Cap Blend category of the market.

- Zacks

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.

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.

Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other 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 Blackrock, EUSA has amassed assets over $457.60 million, 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

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.

Operating expenses on an annual basis are 0.09% for EUSA, making it one of the least expensive products in the space.

EUSA's 12-month trailing dividend yield is 1.18%.

Sector Exposure and Top Holdings

ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

Representing 19.70% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Industrials and Healthcare round out the top three.

Looking at individual holdings, Novavax Inc (NVAX) accounts for about 0.24% of total assets, followed by Enphase Energy Inc (ENPH) and Moderna Inc (MRNA).

The top 10 holdings account for about 2.27% of total assets under management.

Performance and Risk

Year-to-date, the iShares MSCI USA Equal Weighted ETF return is roughly 20.40% so far, and it's up approximately 37.59% over the last 12 months (as of 10/07/2021). EUSA has traded between $60.67 and $88.24 in this past 52-week period.

The ETF has a beta of 1.12 and standard deviation of 23.94% for the trailing three-year period, making it a medium risk choice in the space. With about 632 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) tracks S&P Total Market Index and the Vanguard Total Stock Market ETF (VTI) tracks CRSP US Total Market Index. IShares Core S&P Total U.S. Stock Market ETF has $42.18 billion in assets, Vanguard Total Stock Market ETF has $262.33 billion. ITOT has an expense ratio of 0.03% and VTI charges 0.03%.

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.



Breakout Biotech Stocks with Triple-Digit Profit Potential

The biotech sector is projected to surge beyond $2.4 trillion by 2028 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.

Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Recommendations from previous editions of this report have produced gains of +205%, +258% and +477%. The stocks in this report could perform even better.

See these 7 breakthrough stocks now>>



Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

 

iShares MSCI USA Equal Weighted ETF (EUSA): ETF Research Reports

 

Moderna, Inc. (MRNA): Free Stock Analysis Report

 

Novavax, Inc. (NVAX): Free Stock Analysis Report

 

Enphase Energy, Inc. (ENPH): Free Stock Analysis Report

 

Vanguard Total Stock Market ETF (VTI): ETF Research Reports

 

iShares Core S&P Total U.S. Stock Market ETF (ITOT): ETF Research Reports

 

To read this article on Zacks.com click here.

 

Zacks Investment Research