SPDR MSCI USA Strategic Factors ETF QUS is a sturdy, low-cost fund whose diversification and complementary factor tilts should give it an attractive risk/reward tradeoff over the long term.
This index strategy combines three distinct sleeves that each focus on a different factor: value, quality, and low volatility. Quality and low volatility tend to favor similar stocks that command a premium, so those sleeves can overshadow the fund’s value component. Still, the value sleeve is critical. It penalizes overvalued stocks and pairs well with quality; the two well-vetted factors tend to thrive at different times. 
The fund diversifies well across holdings and sectors as well as at the factor level. Its sector composition tends to mimic the broad market, save for a slightly leaner allocation to consumer discretionary stocks and a steeper healthcare stake. All 600-plus constituents of the MSCI USA Index are present here, and the top 10 constituted just 21% of the portfolio as of July 2023.
Quality and low-volatility influence makes this a defensive fund. It’s not as stable as pure low-volatility funds because quality doesn’t focus on statistical risk and the value sleeve favors more-cyclical names. But the fund offers a smoother ride than the Russell 1000 Index, its category benchmark, outlasting it when the market pulls back but often trailing when it rallies. Indeed, the fund held up about five percentage points better than the Russell 1000 in 2022, landing in the large-blend peer group’s top quartile.
More than 60% of this portfolio normally overlaps with the Russell 1000, so it shouldn’t out- or underperform by much. It has leeway to recoup its fee, though. Its 0.15% expense ratio ranks within the category’s cheapest decile. Plus, consistently low turnover—a product of its mixed multifactor approach—saddles it with few transaction costs.

Analyst Rating

Multifactor exposure with solid downside protection.

Analyst

Ryan Jackson

Apple

Microsoft

UnitedHealth Group

Johnson & Johnson

Eli Lilly

Broadcom

Visa

NVIDIA

Mastercard

This broadly diversified portfolio focuses on quality stocks. It keeps price risk at bay, and weathers volatile markets well—a trio of attributes that should help it beat the Russell 1000 Index over the long term. It merits an Above Average Process Pillar rating.

Above Average

Process

State Street Global Advisors' Global Equity Beta Solutions team manages this fund. The team's global footprint, trading, and risk management processes enable low transaction costs and tight index tracking, supporting an Above Average People Pillar rating.
Karl Schneider and John Law are the named managers on this fund. Schneider is a managing director of SSGA and the deputy head of the Global Equity Beta Solutions team for the Americas region. He started with SSGA in 1997 and has been on this fund since December 2015. Law Joined the firm in 2016 and has helped oversee this strategy since October 2018. 
Mike Feehily, the longtime co-head of Global Equity Beta Solutions and manager of this strategy, left the asset management industry in March 2023. His departure does not erode confidence in this team’s ability to effectively track the index. Schneider and Law have the experience to absorb the responsibility, and the deep trove of portfolio managers and analysts they oversee remains intact. Portfolio managers do not personally invest in this strategy, but part of their variable compensation is linked to index tracking, aligning their interests and investors’.

People

State Street Global Advisors is under new leadership but continues to move along the positive trajectory established by former leaders. SSGA maintains its Above Average Parent Pillar rating.
Cyrus Taraporevala, who oversaw much of SSGA’s recent transformation, retired from the CEO position in December 2022 and passed the baton to his successor, Yie-Hsin Hung. She inherited a business that’s become more disciplined with its fund lineup. Fees have come down, while product development remains focused on fixed-income and sustainability funds, and many of SSGA’s launches have echoed that intention.
The seeds that SSGA planted over the past several years have been bearing fruit. It built out a low-cost series of portfolio building-block ETFs in the U.S. bearing the “SPDR Portfolio” branding. SSGA launched these later than its industry rivals, so they aren’t as large. But they’re competitive, with solid management and low fees, which helped them consistently take in new money over the past several years.
SSGA continued to overhaul its ETF business in Europe with most of its recent fixed-income and sustainability fund launches. Many of these funds track indexes and charge relatively low fees. With operations in the U.S. and Europe standing on a firm foundation, SSGA will put more focus on its Asia-Pacific business—the smallest regional segment of its business.

Parent

SPDR MSCI USA StrategicFactors ETF

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