Should iShares MSCI USA Min Vol Factor ETF (USMV) Be on Your Investing Radar? — TradingView News

The iShares MSCI USA Min Vol Factor ETF USMV was launched on 10/18/2011, and is a passively managed exchange traded fund designed to offer broad exposure to the Large Cap Blend segment of the US equity market.

The fund is sponsored by Blackrock. It has amassed assets over $25.23 billion, making it one of the largest ETFs attempting to match the Large Cap Blend segment of the US equity market.

Why Large Cap Blend

Large cap companies typically have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.

Blend ETFs are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.

Costs

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

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

It has a 12-month trailing dividend yield of 1.76%.

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 to the Information Technology sector–about 24.90% of the portfolio. Healthcare and Financials round out the top three.

Looking at individual holdings, Broadcom Inc AVGO accounts for about 1.79% of total assets, followed by T Mobile Us Inc TMUS and International Business Machines Co IBM.

The top 10 holdings account for about 15.34% of total assets under management.

Performance and Risk

USMV seeks to match the performance of the MSCI USA Minimum Volatility Index before fees and expenses. The MSCI USA Minimum Volatility (USD) Index is composed of U.S. equities that, in the aggregate, have lower volatility characteristics relative to the broader U.S. equity market.

The ETF has added roughly 3.38% so far this year and is up about 14.15% in the last one year (as of 02/22/2024). In the past 52-week period, it has traded between $69.12 and $80.67.

The ETF has a beta of 0.75 and standard deviation of 13.32% for the trailing three-year period, making it a medium risk choice in the space. With about 171 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares MSCI USA Min Vol Factor ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, USMV is a sufficient option for those seeking exposure to the Style Box – Large Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Core S&P 500 ETF IVV and the SPDR S&P 500 ETF SPY track a similar index. While iShares Core S&P 500 ETF has $432.26 billion in assets, SPDR S&P 500 ETF has $488.15 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.

Bottom-Line

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

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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