Designed to provide broad exposure to the Style Box - All Cap Growth category of the market, the iShares MSCI USA Quality GARP ETF (GARP) is a smart beta exchange traded fund launched on 01/14/2020.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
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
Because the fund has amassed over $3.06 billion, this makes it one of the largest ETFs in the Style Box - All Cap Growth. GARP is managed by Blackrock. GARP, before fees and expenses, seeks to match the performance of the MSCI USA QUALITY GARP SELECT INDEX .
The MSCI USA Quality GARP Select Index composes of U.S. large and mid-capitalization growth stocks exhibiting favourable value and quality characteristics.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for this ETF are 0.15%, making it one of the least expensive products in the space.
The fund has a 12-month trailing dividend yield of 0.26%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector - about 53.7% of the portfolio. Telecom and Consumer Discretionary round out the top three.
Looking at individual holdings, Microsoft (MSFT) accounts for about 5.31% of total assets, followed by Micron Technology (MU) and Apple Inc (AAPL).
The top 10 holdings account for about 41.96% of total assets under management.
Performance and Risk
Year-to-date, the iShares MSCI USA Quality GARP ETF has added roughly 22.13% so far, and is up about 29.41% over the last 12 months (as of 09/14/2026). GARP has traded between $61.59 $85.16 in this past 52-week period.
GARP has a beta of 1.21 and standard deviation of 22.34% for the trailing three-year period. With about 135 holdings, it effectively diversifies company-specific risk .
Alternatives
iShares MSCI USA Quality GARP ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.
iShares Morningstar Growth ETF (ILCG) tracks MORNINGSTAR US LARGE-MID CP BRD GRWTH ID and the iShares Core S&P U.S. Growth ETF (IUSG) tracks S&P 900 Growth Index. iShares Morningstar Growth ETF has $3.14 billion in assets, iShares Core S&P U.S. Growth ETF has $33.24 billion. ILCG has an expense ratio of 0.04% and IUSG 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 Growth
Bottom Line
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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iShares MSCI USA Quality GARP ETF (GARP): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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