Launched on 11/24/2015, the Xtrackers Russell US Multifactor ETF (DEUS – Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box – Large Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Managed by Deutsche Bank Ag, DEUS has amassed assets over $201.91 million, making it one of the average sized ETFs in the Style Box – Large Cap Blend. This particular fund, before fees and expenses, seeks to match the performance of the Russell 1000 Comprehensive Factor Index.
The Russell 1000 Comprehensive Factor Index provides exposure to domestic equities based on five factors Quality, Value, Momentum, Low Volatility and Size.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF’s expense ratio.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.17%.
It has a 12-month trailing dividend yield of 1.34%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Taking into account individual holdings, Mckesson Corp (MCK – Free Report) accounts for about 1.14% of the fund’s total assets, followed by Cardinal Health Inc (CAH – Free Report) and Arch Capital Gp (ACGL.O).
DEUS’s top 10 holdings account for about 7.84% of its total assets under management.
Performance and Risk
The ETF return is roughly 16.24% so far this year and is up about 15.91% in the last one year (as of 12/27/2024). In the past 52-week period, it has traded between $46.71 and $58.19.
DEUS has a beta of 1.02 and standard deviation of 16.34% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 858 holdings, it effectively diversifies company-specific risk.
Alternatives
Xtrackers Russell US Multifactor 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 – Free Report) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY – Free Report) tracks S&P 500 Index. IShares Core S&P 500 ETF has $604.70 billion in assets, SPDR S&P 500 ETF has $642.93 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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