Is iShares U.S. Equity Factor ETF (LRGF) a Strong ETF Right Now?

Launched on 04/28/2015, the iShares U.S. Equity Factor ETF (LRGF) is a smart beta exchange traded fund offering broad exposure to the Style Box - All Cap Value 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.

Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.

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.

By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.

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

The fund is managed by Blackrock, and has been able to amass over $2.96 billion, which makes it one of the largest ETFs in the Style Box - All Cap Value. This particular fund, before fees and expenses, seeks to match the performance of the MSCI USA Diversified Multiple-Factor Index.

The STOXX U.S. Equity Factor Index composes of U.S. large and mid-capitalization stocks that have favourable exposure to target style factors subject to constraints.

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.

Operating expenses on an annual basis are 0.08% for this ETF, which makes it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 1.09%.

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.

For LRGF, it has heaviest allocation in the Information Technology sector --about 35.6% of the portfolio --while Financials and Consumer Discretionary round out the top three.

Taking into account individual holdings, Nvidia Corp (NVDA) accounts for about 6.9% of the fund's total assets, followed by Apple Inc (AAPL) and Microsoft Corp (MSFT).

The top 10 holdings account for about 33.92% of total assets under management.

Performance and Risk

Year-to-date, the iShares U.S. Equity Factor ETF return is roughly 15.77% so far, and was up about 19.17% over the last 12 months (as of 10/07/2025). LRGF has traded between $51.37 $69.38 in this past 52-week period.

LRGF has a beta of 0.98 and standard deviation of 16.22% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 289 holdings, it effectively diversifies company-specific risk .

Alternatives

iShares U.S. Equity Factor ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.

Fidelity High Dividend ETF (FDVV) tracks Fidelity Core Dividend Index and the iShares Core S&P U.S. Value ETF (IUSV) tracks S&P 900 Value Index. Fidelity High Dividend ETF has $7.15 billion in assets, iShares Core S&P U.S. Value ETF has $23.08 billion. FDVV has an expense ratio of 0.16% and IUSV 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 Value

Bottom Line

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

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