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

Making its debut on 04/28/2015, smart beta exchange traded fund iShares U.S. Equity Factor ETF (LRGF) provides investors 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 offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.

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.

This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

Managed by Blackrock, LRGF has amassed assets over $3.73 billion, making it one of the largest ETFs in the Style Box - All Cap Value. Before fees and expenses, LRGF 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

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

Operating expenses on an annual basis are 0.08% for LRGF, making it one of the least expensive products in the space.

The fund has a 12-month trailing dividend yield of 1.04%.

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.

For LRGF, it has heaviest allocation in the Information Technology sector --about 36.9% of the portfolio --while Financials and Consumer Discretionary round out the top three.

Looking at individual holdings, Nvidia Corp (NVDA) accounts for about 7.38% of total assets, followed by Apple Inc (AAPL) and Alphabet Inc Class C (GOOG).

The top 10 holdings account for about 34.56% of total assets under management.

Performance and Risk

So far this year, LRGF has added about 14.1%, and was up about 19.68% in the last one year (as of 08/18/2026). During this past 52-week period, the fund has traded between $64.13 and $79.35.

The fund has a beta of 0.99 and standard deviation of 15.04% for the trailing three-year period, which makes LRGF a medium risk choice in this particular space. With about 296 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 $10.45 billion in assets, iShares Core S&P U.S. Value ETF has $27.89 billion. FDVV has an expense ratio of 0.15% 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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