State Street Global Advisors today launched the SPDR MSCI Quality Mix USA ETF (QUS), a passively managed smart-beta fund that combines three different strategies in one product.
The fund tracks the MSCI USA Quality Mix A-Series Index that equal weights the MSCI USA Value Weighted, MSCI USA Minimum Volatility and MSCI USA Quality indexes. QUS is the thirteenth product in State Street’s lineup of Quality Mix ETFs, all of which employ MSCI indexes that place an equal emphasis on the three style factors of low volatility, quality and value. This category of State Street ETFs covers developed, emerging, single country and global markets.
MSCI and State Street call this three-for-one factor model “advanced beta,” or what others describe as smart beta, strategic beta or alternative beta. Whatever it’s called, the premise behind these and other factor-based funds is to break the link between the price of an asset and its weight in a portfolio, which smart-beta proponents say leads to outsized concentrations of larger, more expensive stocks in cap-weighted indexes and the funds that track them.
According to State Street, passive funds employing multiple factors in one offering are designed to capture gains in rising markets while mitigating risk during spells of market volatility, and at much less cost than active management.
The QUS fund’s portfolio consists of about 630 large- and mid-cap U.S. companies, and the top 10 holdings read like a Who’s Who of bellwether corporations ranging from Exxon Mobil (3.05 percent of the portfolio) to McDonald’s (1.27 percent). Information technology, health care and consumer discretionary are the top three sectors.
The new ETF’s expense ratio is 15 basis points, and its underlying index carries a dividend yield of 2.03 percent. QUS trades on the NYSE Arca exchange.