iShares has registered a U.S. equities factor-based ETF called the MSCI USA Quality Factor ETF. The fund will add to the company’s lineup of factor-based ETFs that track MSCI Indexes rolled out earlier this month.
The MSCI USA Quality Index is based on a traditional market capitalization-weighted parent index, the MSCI USA Index, which includes U.S. large- and mid-capitalization stocks. The underlying index seeks to capture the performance of stocks believed to be quality stocks selected from the parent index, as identified through certain financial metrics, such as: high return on equity, stable year-over-year earnings growth and low financial leverage, according to the registration statement.
The underlying index reweights the selected quality stocks from the parent index to emphasize stocks with high quality scores based on three main fundamental variables: return on equity, earnings variability and debt-to-equity. As of March 31, 2013, there were 125 securities in the underlying index. Components primarily include consumer discretionary, energy and information technology companies, according to the registration statement.
Earlier this month, iShares rolled out the iShares MSCI USA Momentum Factor ETF (MTUM), the iShares MSCI USA Size Factor ETF (SIZE)and the iShares MSCI USA Value Factor ETF (VLUE). All three ETFs charge just 0.15%, according to Morningstar. Melissa Garville, a Blackrock spokeswoman declined to specify expenses for the latest factor-based ETF, but it’s likely that they will be in the same ballpark.
