Is iShares MSCI USA Equal Weighted ETF (EUSA) a Strong ETF Right Now?

Designed to provide broad exposure to the Style Box - All Cap Blend category of the market, the iShares MSCI USA Equal Weighted ETF (EUSA) is a smart beta exchange traded fund launched on 05/05/2010.

What Are Smart Beta ETFs?

For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.

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.

However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.

These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.

Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.

Fund Sponsor & Index

EUSA is managed by Blackrock, and this fund has amassed over $1.22 billion, which makes it one of the larger ETFs in the Style Box - All Cap Blend. Before fees and expenses, this particular fund seeks to match the performance of the MSCI USA Equal Weighted Index.

The MSCI USA Equal Weighted Index represents the MSCI USA Index, measures the performance of equity securities in the top 85% by market capitalization of equity securities listed on stock exchanges in the United States.

Cost & Other Expenses

When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.

Annual operating expenses for EUSA are 0.09%, which makes it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 1.52%.

Sector Exposure and Top Holdings

ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

Representing 15.80% of the portfolio, the fund has heaviest allocation to the Industrials sector; Financials and Information Technology round out the top three.

Looking at individual holdings, Okta Inc Class A (OKTA) accounts for about 0.22% of total assets, followed by Molina Healthcare Inc (MOH) and Erie Indemnity Class A (ERIE).

EUSA's top 10 holdings account for about 2.06% of its total assets under management.

Performance and Risk

The ETF has lost about -1.52% so far this year and it's up approximately 4.42% in the last one year (as of 04/01/2025). In the past 52-week period, it has traded between $85.34 and $102.14.

The ETF has a beta of 1.09 and standard deviation of 17.31% for the trailing three-year period, making it a medium risk choice in the space. With about 581 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares MSCI USA Equal Weighted ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.

IShares Core S&P Total U.S. Stock Market ETF (ITOT) tracks S&P Total Market Index and the Vanguard Total Stock Market ETF (VTI) tracks CRSP US Total Market Index. IShares Core S&P Total U.S. Stock Market ETF has $61.93 billion in assets, Vanguard Total Stock Market ETF has $438.88 billion. ITOT has an expense ratio of 0.03% and VTI charges 0.03%.

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 Blend.

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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This article originally published on Zacks Investment Research (zacks.com).

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