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Is iShares U.S. Equity Factor ETF (LRGF) a Strong ETF Right Now?
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The iShares U.S. Equity Factor ETF (LRGF - Free Report) was launched on 04/28/2015, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - All Cap Value category of the market.
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.
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.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
LRGF is managed by Blackrock, and this fund has amassed over $1.77 billion, which makes it one of the largest ETFs in the Style Box - All Cap Value. Before fees and expenses, LRGF seeks to match the performance of the MSCI USA Diversified Multiple-Factor Index.
The STOXX U.S. Equity Factor Index composes of U.S. large and mid-capitalization stocks that have favourable exposure to target style factors subject to constraints.
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.
Operating expenses on an annual basis are 0.08% for LRGF, making it one of the least expensive products in the space.
The fund has a 12-month trailing dividend yield of 1.35%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For LRGF, it has heaviest allocation in the Information Technology sector --about 32.10% of the portfolio --while Consumer Discretionary and Financials round out the top three.
When you look at individual holdings, Microsoft Corp (MSFT - Free Report) accounts for about 6.58% of the fund's total assets, followed by Apple Inc (AAPL - Free Report) and Nvidia Corp (NVDA - Free Report) .
LRGF's top 10 holdings account for about 28.82% of its total assets under management.
Performance and Risk
Year-to-date, the iShares U.S. Equity Factor ETF has added roughly 11.10% so far, and it's up approximately 35.83% over the last 12 months (as of 03/21/2024). LRGF has traded between $39.84 and $53.65 in this past 52-week period.
The fund has a beta of 0.98 and standard deviation of 17.34% for the trailing three-year period, which makes LRGF a medium risk choice in this particular space. With about 296 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares U.S. Equity Factor ETF is an excellent option for investors seeking to outperform the Style Box - All Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
Dimensional U.S. Targeted Value ETF (DFAT - Free Report) tracks ---------------------------------------- and the iShares Core S&P U.S. Value ETF (IUSV - Free Report) tracks S&P 900 Value Index. Dimensional U.S. Targeted Value ETF has $9.75 billion in assets, iShares Core S&P U.S. Value ETF has $16.71 billion. DFAT has an expense ratio of 0.28% and IUSV charges 0.04%.
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 Value.
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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Is iShares U.S. Equity Factor ETF (LRGF) a Strong ETF Right Now?
The iShares U.S. Equity Factor ETF (LRGF - Free Report) was launched on 04/28/2015, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - All Cap Value category of the market.
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.
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.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
LRGF is managed by Blackrock, and this fund has amassed over $1.77 billion, which makes it one of the largest ETFs in the Style Box - All Cap Value. Before fees and expenses, LRGF seeks to match the performance of the MSCI USA Diversified Multiple-Factor Index.
The STOXX U.S. Equity Factor Index composes of U.S. large and mid-capitalization stocks that have favourable exposure to target style factors subject to constraints.
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.
Operating expenses on an annual basis are 0.08% for LRGF, making it one of the least expensive products in the space.
The fund has a 12-month trailing dividend yield of 1.35%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For LRGF, it has heaviest allocation in the Information Technology sector --about 32.10% of the portfolio --while Consumer Discretionary and Financials round out the top three.
When you look at individual holdings, Microsoft Corp (MSFT - Free Report) accounts for about 6.58% of the fund's total assets, followed by Apple Inc (AAPL - Free Report) and Nvidia Corp (NVDA - Free Report) .
LRGF's top 10 holdings account for about 28.82% of its total assets under management.
Performance and Risk
Year-to-date, the iShares U.S. Equity Factor ETF has added roughly 11.10% so far, and it's up approximately 35.83% over the last 12 months (as of 03/21/2024). LRGF has traded between $39.84 and $53.65 in this past 52-week period.
The fund has a beta of 0.98 and standard deviation of 17.34% for the trailing three-year period, which makes LRGF a medium risk choice in this particular space. With about 296 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares U.S. Equity Factor ETF is an excellent option for investors seeking to outperform the Style Box - All Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
Dimensional U.S. Targeted Value ETF (DFAT - Free Report) tracks ---------------------------------------- and the iShares Core S&P U.S. Value ETF (IUSV - Free Report) tracks S&P 900 Value Index. Dimensional U.S. Targeted Value ETF has $9.75 billion in assets, iShares Core S&P U.S. Value ETF has $16.71 billion. DFAT has an expense ratio of 0.28% and IUSV charges 0.04%.
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 Value.
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.