Launched on 01/14/2020, the iShares MSCI USA Quality GARP ETF (GARP) is designed to give investors a wide reach within the Style Box – All Cap Growth category.
Understanding Smart Beta ETFs
Smart beta ETFs differ from traditional market cap weighted indexes, which reflect the market or certain segments of it. These conventional products have long dominated the ETF landscape.
Market cap weighted indexes are favored for their cost-effectiveness and transparent nature, making them suitable for investors who believe in the efficiency of markets. However, for those determined to surpass market return through careful stock selection, smart beta funds present an appealing alternative.
Smart beta funds concentrate on specific fundamental characteristics to choose stocks that are expected to perform better in terms of risk and return. Various methodologies, such as equal-weighting and fundamental weighting, are available, though not all guarantee superior returns.
The Fund Sponsor and Index
This ETF is managed by BlackRock and has acquired over $349.28 million in assets, placing it among the mid-sized funds within its category. GARP’s goal is to mimic the performance of the MSCI USA QUALITY GARP SELECT INDEX before fees and costs.
The MSCI USA Quality GARP Select Index comprises U.S. large and mid-cap growth stocks that showcase promising value and quality traits.
Costs and Associated Expenses
Expense ratios are critical for investors to consider when selecting an ETF. Generally, lower-cost funds yield better returns, assuming all other factors are equal.
The iShares MSCI USA Quality GARP ETF features an annual expense ratio of 0.15%, making it one of the cheaper options on the market.
Currently, it offers a 12-month trailing dividend yield of 0.37%.
Sector Exposure and Key Holdings
ETFs can provide diverse exposure, reducing the risks associated with individual stocks. However, thorough investigation of a fund’s holdings is essential before investment. Many ETFs are transparent, often sharing their holdings daily.
For GARP, the largest share is in Information Technology, making up about 47.90% of the portfolio, with Consumer Discretionary and Financials following close behind.
Among the fund’s top holdings, Broadcom Inc (AVGO) represents about 6.02% of total assets, alongside heavyweights like Meta Platforms Inc Class A (META) and Apple Inc (AAPL). Collectively, the top 10 holdings account for approximately 45.34% of total assets under management.
Performance and Risk Assessment
As of 02/20/2025, the iShares MSCI USA Quality GARP ETF has gained about 5.29% year-to-date and has remained flat over the last 12 months. Its trading range has been between $47.04 and $59.23 in the past year.
This fund has a beta value of 1.07, indicating a moderate level of volatility compared to the overall market. Spreading across roughly 145 holdings allows it to effectively mitigate company-specific risks.
Potential Alternatives
While the iShares MSCI USA Quality GARP ETF is a solid choice for those looking to excel in the Style Box – All Cap Growth market, alternative ETFs exist that might better suit certain investment styles.
The Fidelity Blue Chip Growth ETF (FBCG) focuses on —————————————-, while the iShares Core S&P U.S. Growth ETF (IUSG) targets the S&P 900 Growth Index. The former has $4.25 billion in assets, while the latter boasts $21.72 billion. FBCG carries an expense ratio of 0.59%, whereas IUSG offers a lower cost at 0.04%.
For investors keen on finding economical and lower-risk options, traditional market cap weighted ETFs that aim to replicate returns in the Style Box – All Cap Growth category might be worth exploring.
Final Thoughts
To discover more about this and other ETFs, consider filtering for products aligned with your investment goals. Staying informed about the latest ETF developments may also help you make better investment decisions.
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iShares MSCI USA Quality GARP ETF (GARP): ETF Research Reports
Apple Inc. (AAPL): Free Stock Analysis Report
Broadcom Inc. (AVGO): Free Stock Analysis Report
iShares Core S&P U.S. Growth ETF (IUSG): ETF Research Reports
Fidelity Blue Chip Growth ETF (FBCG): ETF Research Reports
Meta Platforms, Inc. (META): Free Stock Analysis Report
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
