iShares MSCI USA Quality Factor ETF

QUAL

Market cap $53.2B

The S&P 500‘s 2.7% drop on Friday expose its tech-heavy tilt. Top 10 stocks represent 37% of the index's weight, while the Magnificent 7 account for about 35% of YTD gains.

Market risks are mounting, prompting investors to seek stability and protection through defensive ETFs.

Invesco MSCI USA ETF (PBUS) and iShares MSCI USA Quality Factor ETF (QUAL) are both rated as buys for US equity exposure. PBUS offers lower costs, lower portfolio turnover, and slightly better risk-adjusted returns compared to QUAL, making PBUS the preferred choice. QUAL's quality screening does not provide significant differentiation or outperformance versus PBUS, despite higher fees and turnover.

A smart beta exchange traded fund, the iShares MSCI USA Quality Factor ETF (QUAL) debuted on 07/16/2013, and offers broad exposure to the Style Box - All Cap Blend category of the market.

Goldman Sachs warns of rising AI bubble risks, making diversification with equal-weight, value and quality ETFs a smart defensive move.

As the September effect looms over Wall Street, investors should eye defensive ETFs like consumer staples, gold and dividends to cushion volatility.

Key Points in This Article: Bill Gates' investing philosophy emphasizes stability, quality, and long-term value, drawing from the investment approach of his major charitable trust, the Bill & Melinda Gates Foundation Trust.

The iShares MSCI USA Quality Factor ETF (QUAL) was launched on 07/16/2013, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - All Cap Blend category of the market.

QUAL has underperformed the S&P 500 since April, with high-beta stocks outperforming quality-focused names. I maintain a hold rating due to QUAL's weak relative strength and premium valuation, trading at a high 24.2x P/E. The ETF's portfolio is concentrated in large-cap tech, with resistance near $187 and a neutral technical outlook.

With the possibility of S&P 500's momentum fading and equity outflows mounting, defensive ETFs like VIG, XLP and VXX draw investor focus.