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

Sweta Killa

Making its debut on 05/05/2010, smart beta exchange traded fund iShares MSCI USA Equal Weighted ETF (EUSA) provides investors broad exposure to the Style Box - All Cap Blend category of the market.

What Are Smart Beta ETFs?

Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.

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.

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.

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These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination 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

The fund is sponsored by Blackrock. It has amassed assets over $372.27 M, making it one of the larger ETFs in the Style Box - All Cap Blend. This particular fund, before fees and expenses, 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

Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.

Annual operating expenses for this ETF are 0.15%, making it one of the cheaper products in the space.

The fund has a 12-month trailing dividend yield of 1.46%.

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.

This ETF has heaviest allocation in the Information Technology sector - about 16.40% of the portfolio. Financials and Industrials round out the top three.

Taking into account individual holdings, Viacomcbs Inc Class B (VIAC) accounts for about 0.33% of the fund's total assets, followed by Truist Financial Corp (TFC) and Bristol Myers Squibb (BMY).

EUSA's top 10 holdings account for about 2.25% of its total assets under management.

Performance and Risk

The ETF has added roughly 2.09% so far this year and it's up approximately 22.56% in the last one year (as of 01/22/2020). In the past 52-week period, it has traded between $53.37 and $65.58.

The ETF has a beta of 1.07 and standard deviation of 12.36% for the trailing three-year period, making it a medium risk choice in the space. With about 643 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 $25.78 B in assets, Vanguard Total Stock Market ETF has $142.08 B. 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.


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iShares MSCI USA Equal Weighted ETF (EUSA): ETF Research Reports
 
Bristol-Myers Squibb Company (BMY) : 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
 
BB&T Corporation (TFC) : Free Stock Analysis Report
 
CBS Corporation (VIAC) : Free Stock Analysis Report
 
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Zacks Investment Research