Designed to provide broad exposure to the Large Cap Blend segment of the US equity market, the FlexShares US Quality Large Cap ETF (QLC) is a passively managed exchange traded fund launched on 09/23/2015.
The fund is sponsored by Flexshares. It has amassed assets over $356.36 million, making it one of the average sized ETFs attempting to match the Large Cap Blend segment of the US equity market.
Why Large Cap Blend
Large cap companies usually have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.
Blend ETFs are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.
Costs
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.25%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1%.
Sector Exposure and Top Holdings
ETFs offer a 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.
This ETF has heaviest allocation to the Information Technology sector--about 33.30% of the portfolio. Financials and Telecom round out the top three.
Looking at individual holdings, Apple Inc Common Stock Usd 0.00001 (AAPL) accounts for about 8.44% of total assets, followed by Nvidia Corp Common Stock Usd 0.001 (NVDA) and Microsoft Corp Common Stock Usd 0.00000625 (MSFT).
The top 10 holdings account for about 37.67% of total assets under management.
Performance and Risk
QLC seeks to match the performance of the Northern Trust Quality Large Cap Index before fees and expenses. The Northern Trust Quality Large Cap Index is designed to measure the performance of a universe of large capitalization securities which demonstrate characteristics of better quality, attractive valuation and positive momentum.
The ETF return is roughly 3.29% so far this year and was up about 28.57% in the last one year (as of 01/22/2025). In the past 52-week period, it has traded between $54.10 and $68.90.
The ETF has a beta of 1 and standard deviation of 17.14% for the trailing three-year period, making it a medium risk choice in the space. With about 159 holdings, it effectively diversifies company-specific risk.
Alternatives
FlexShares US Quality Large Cap ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, QLC is a great option for investors seeking exposure to the Style Box - Large Cap Blend segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Core S&P 500 ETF (IVV) and the SPDR S&P 500 ETF (SPY) track a similar index. While iShares Core S&P 500 ETF has $605.25 billion in assets, SPDR S&P 500 ETF has $634.98 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
Bottom-Line
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
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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SPDR S&P 500 ETF (SPY): ETF Research Reports
iShares Core S&P 500 ETF (IVV): ETF Research Reports
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