Is SPDR MSCI USA StrategicFactors ETF (QUS) a Strong ETF Right Now?

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The SPDR MSCI USA StrategicFactors ETF (QUS) was launched on 04/15/2015, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box – Large Cap Blend category of the market.

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What Are Smart Beta ETFs?

Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.

Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.

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.

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.

Even though this space provides many choices to investors–think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting–not all have been able to deliver first-rate results.

Fund Sponsor & Index

The fund is managed by State Street Global Advisors, and has been able to amass over $1.03 billion, which makes it one of the larger ETFs in the Style Box – Large Cap Blend. This particular fund seeks to match the performance of the MSCI USA Factor Mix A-Series Index before fees and expenses.

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

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are 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 1.39%.

Sector Exposure and Top Holdings

It is important to delve into an ETF’s holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, 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 31.10% of the portfolio. Healthcare and Financials round out the top three.

Looking at individual holdings, Microsoft Corporation (MSFT) accounts for about 3.52% of total assets, followed by Apple Inc. (AAPL) and Johnson & Johnson (JNJ).

Its top 10 holdings account for approximately 21.24% of QUS’s total assets under management.

Performance and Risk

The ETF has added roughly 24.71% and is up about 28.76% so far this year and in the past one year (as of 11/23/2021), respectively. QUS has traded between $102.23 and $129.10 during this last 52-week period.

QUS has a beta of 0.92 and standard deviation of 21.83% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 621 holdings, it effectively diversifies company-specific risk.

Alternatives

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 $325.98 billion in assets, SPDR S&P 500 ETF has $423.35 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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SPDR MSCI USA StrategicFactors ETF (QUS): ETF Research Reports
 
Apple Inc. (AAPL): Free Stock Analysis Report
 
Microsoft Corporation (MSFT): Free Stock Analysis Report
 
Johnson & Johnson (JNJ): Free Stock Analysis Report
 
SPDR S&P 500 ETF (SPY): ETF Research Reports
 
iShares Core S&P 500 ETF (IVV): ETF Research Reports
 
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