A smart beta exchange traded fund, the iShares Core S&P U.S. Value ETF (IUSV) debuted on 07/24/2000, and offers 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
Managed by Blackrock, IUSV has amassed assets over $20.09 billion, making it the largest ETF in the Style Box - All Cap Value. Before fees and expenses, IUSV seeks to match the performance of the S&P 900 Value Index.
The S&P 900 Value Index measures the performance of the large and mid-capitalization value sector of the U.S. equity market.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.04% for this ETF, which makes it one of the least expensive products in the space.
IUSV's 12-month trailing dividend yield is 1.89%.
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.
For IUSV, it has heaviest allocation in the Financials sector --about 25.10% of the portfolio --while Healthcare and Industrials round out the top three.
Taking into account individual holdings, Berkshire Hathaway Inc Class B (BRK.B) accounts for about 3.63% of the fund's total assets, followed by Jpmorgan Chase & Co (JPM) and Exxon Mobil Corp (XOM).
Its top 10 holdings account for approximately 18.16% of IUSV's total assets under management.
Performance and Risk
The ETF has added about 17.97% so far this year and is up about 24.65% in the last one year (as of 12/09/2024). In the past 52-week period, it has traded between $81.52 and $100.02.
IUSV has a beta of 0.94 and standard deviation of 14.77% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 735 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares Core S&P U.S. Value 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) tracks ---------------------------------------- and the Capital Group Dividend Value ETF (CGDV) tracks ----------------------------------------. Dimensional U.S. Targeted Value ETF has $11.54 billion in assets, Capital Group Dividend Value ETF has $12.35 billion. DFAT has an expense ratio of 0.28% and CGDV charges 0.33%.
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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Get it free >>iShares Core S&P U.S. Value ETF (IUSV): ETF Research Reports
JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report
Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
Berkshire Hathaway Inc. (BRK.B) : Free Stock Analysis Report
Dimensional U.S. Targeted Value ETF (DFAT): ETF Research Reports
Capital Group Dividend Value ETF (CGDV): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
