Designed to provide broad exposure to the Large Cap Blend segment of the US equity market, the iShares MSCI USA Min Vol Factor ETF (USMV – Free Report) is a passively managed exchange traded fund launched on 10/18/2011.
The fund is sponsored by Blackrock. It has amassed assets over $22.59 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
Companies that find themselves in the large cap category 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.
Typically holding a combination of both growth and value stocks, blend ETFs also demonstrate qualities seen in value and growth investments.
Costs
When considering an ETF’s total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
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 1.67%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund’s holdings before investing. Luckily, 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 26.70% of the portfolio. Financials and Healthcare round out the top three.
Looking at individual holdings, Walmart Inc (WMT – Free Report) accounts for about 1.60% of total assets, followed by Berkshire Hathaway Inc Class B (BRK.B – Free Report) and Merck & Co Inc (MRK – Free Report) .
The top 10 holdings account for about 15.12% 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 gained about 0% so far this year and it’s up approximately 15.70% in the last one year (as of 01/02/2025). In the past 52-week period, it has traded between $77.86 and $94.57.
The ETF has a beta of 0.78 and standard deviation of 12.97% for the trailing three-year period, making it a medium risk choice in the space. With about 187 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares MSCI USA Min Vol Factor ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, USMV is an outstanding option for investors seeking exposure to the Style Box – Large Cap Blend segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Core S&P 500 ETF (IVV – Free Report) and the SPDR S&P 500 ETF (SPY – Free Report) track a similar index. While iShares Core S&P 500 ETF has $583.68 billion in assets, SPDR S&P 500 ETF has $619.60 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
Bottom-Line
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also 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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