March can be a turbulent month for investors, with past years showing significant market dips. This year is no different, as geopolitical concerns, rising energy costs, and increasing unemployment figures contribute to market uncertainty.
However, savvy investors are looking beyond short-term volatility towards long-term opportunities. One exchange-traded fund (ETF) gaining attention is the iShares MSCI USA Quality GARP ETF (NYSEMKT: GARP). This ETF focuses on growth at a reasonable price (GARP) stocks, offering a blend of growth potential and value.
The iShares MSCI USA Quality GARP ETF aims to deliver long-term growth while mitigating the risks associated with overvalued stocks. It tracks the MSCI USA Quality GARP Index, which includes both large- and mid-cap growth stocks that meet specific value and quality criteria. These criteria ensure that the ETF comprises reasonably priced stocks with strong growth prospects.
The index uses a proprietary scoring system that considers market capitalisation, growth characteristics, value, and quality to weight the stocks. The ETF currently holds 147 stocks. Its top five holdings are Meta Platforms, Microsoft, Nvidia, Apple, and Lam Research.
The iShares MSCI USA Quality GARP ETF has consistently outperformed major market indices like the S&P 500 and the Russell 1000. Over the past year, the ETF has generated a return of 32%, significantly higher than the 21.5% returns of both the S&P 500 and the Russell 1000.
Looking at a longer timeframe, the ETF’s performance is equally impressive. Over the past five years, it has achieved an average annualised return of 16%, compared to 11.5% for the S&P 500 and 10.7% for the Russell 1000.
Here’s a comparison of the ETF’s performance against the S&P 500 and Russell 1000:
| Index | 12-Month Return | 5-Year Annualised Return |
|---|---|---|
| iShares MSCI USA Quality GARP ETF | 32% | 16% |
| S&P 500 | 21.5% | 11.5% |
| Russell 1000 | 21.5% | 10.7% |
For investors seeking growth potential without excessive valuation risk, the iShares MSCI USA Quality GARP ETF presents a compelling option in today’s uncertain market environment.
