QUAL includes quality stocks in its portfolio

The iShares MSCI USA Quality Factor ETF (QUAL) is a smart beta fund that seeks to track the investment results of the MSCI USA Sector Neutral Quality Index. The index selects stocks on the basis of the quality score that each stock exhibits. According to the fund’s prospectus, “the quality score of each security in the parent index is determined based on three fundamental variables: high return on equity, stable year-over-year earnings growth and low debt to equity.”

Analyzing the iShares’ Quality Smart Beta ETFs

QUAL has a vast portfolio

QUAL doesn’t necessarily invest 100% of its net assets in the parts of its index. Currently, it manages a net asset of $1.14 billion. It’s distributed over 125 securities. QUAL’s top five holdings include Microsoft (MSFT), Johnson & Johnson (JNJ), ExxonMobil (XOM), Apple (AAPL), and Gilead Sciences (GILD). They account for almost 22.50% of QUAL. QUAL is a passively managed fund. It has an expense ratio of 0.15%. Its current YTD (year-to-date) return is 5.12% as of August 14, 2015. Since its inception on July 16, 2013, its total return is 14.26%.

IQLT is QUAL’s international version

The iShares MSCI International Developed Quality Factor ETF (IQLT) is a similar fund to QUAL with respect its strategy for selecting stock. The main difference between the two is that IQLT’s index selects stocks from a global perspective. In contrast, QUAL invests in stocks that are only issued in the US. Since IQLT can invest in stocks that are issued internationally, its investment horizon increases. It also creates more opportunities for targeting market inefficiencies.

In the next part of this series, we’ll discuss iShares’ smart beta funds that take the size and value of stocks into consideration for writing the index.

Latest articles

This year, Pfizer (PFE) stock has fallen 0.34% and Bristol-Myers Squibb (BMY) stock has fallen 6.48%. Both companies are focused on strengthening their position in the high-growth oncology and immunology markets. Let's take a closer look at each.

Walt Disney’s (DIS) latest movie, Toy Story 4, has reportedly broken records in the opening weekend with $118 million in sales. However, the opening weekend collection was behind analysts’ expectations of at least $150 million in the first weekend.

24 Jun

Will Home Depot’s Upward Momentum to Continue?

WRITTEN BY Rajiv Nanjapla

As of June 21, Home Depot (HD) was trading at $209.39, which implies a rise of 9.7% since the announcement of its first-quarter earnings on May 21. Also, the company was trading at a premium of 32.4% from its 52-week low of $158.09 and a discount of 2.8% from its 52-week high of $215.43.

On June 21, Aurora Cannabis (ACB) made an announcement that indicated that it will move towards higher margin vape products. In addition, the company also believes concentrates and edibles will command higher margins. In anticipation of this development, the company announced the expansion of its facility to capitalize on growth related to these segments.

Shares of Mondelēz International (MDLZ) are scaling new heights thanks to its stellar gains so far this year. Mondelēz stock is up 38.0% on a YTD (year-to-date) basis, and it closed at $55.25—just a shade lower than its 52-week high of $55.71—on June 21.

24 Jun

How Long Will Facebook's Libra Fuel Bitcoin Rally?

WRITTEN BY Mayur Sontakke, CFA, FRM

Ever since the news about Facebook’s (FB) cryptocurrency project broke, Bitcoin has rallied on the hope that Facebook’s entry in the space will help make cryptocurrencies mainstream. Facebook’s cryptocurrency will be called Libra and will be governed by an association with 28 founding members across industries.

172.31.38.64