Launched on 01/14/2020, the iShares MSCI USA Quality GARP ETF (GARP) is a smart beta exchange traded fund offering broad exposure to the Style Box - All Cap Growth category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Because the fund has amassed over $625.49 million, this makes it one of the average sized ETFs in the Style Box - All Cap Growth. GARP is managed by Blackrock. Before fees and expenses, GARP seeks to match the performance of the MSCI USA QUALITY GARP SELECT INDEX .
The MSCI USA Quality GARP Select Index composes of U.S. large and mid-capitalization growth stocks exhibiting favourable value and quality characteristics.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
With one of the least expensive products in the space, this ETF has annual operating expenses of 0.15%.
The fund has a 12-month trailing dividend yield of 0.38%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 47.3% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Consumer Discretionary and Financials round out the top three.
When you look at individual holdings, Nvidia Corp (NVDA) accounts for about 5.71% of the fund's total assets, followed by Microsoft Corp (MSFT) and Apple Inc (AAPL).
GARP's top 10 holdings account for about 40.72% of its total assets under management.
Performance and Risk
So far this year, GARP has added roughly 10.42%, and is up roughly 20.72% in the last one year (as of 08/25/2025). During this past 52-week period, the fund has traded between $45.13 and $62.54.
The fund has a beta of 1.14 and standard deviation of 24.65% for the trailing three-year period. With about 139 holdings, it effectively diversifies company-specific risk .
Alternatives
iShares MSCI USA Quality GARP ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.
iShares Morningstar Growth ETF (ILCG) tracks MORNINGSTAR US LARGE-MID CP BRD GRWTH ID and the iShares Core S&P U.S. Growth ETF (IUSG) tracks S&P 900 Growth Index. iShares Morningstar Growth ETF has $2.94 billion in assets, iShares Core S&P U.S. Growth ETF has $24.34 billion. ILCG has an expense ratio of 0.04% and IUSG changes 0.04%.
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 Growth
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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iShares MSCI USA Quality GARP ETF (GARP): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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