IAU vs. QUAL: What’s The Difference?

The iShares Gold Trust (IAU) and the iShares MSCI USA Quality Factor ETF (QUAL) are both among the Top 100 ETFs. IAU is a iShares N/A fund and QUAL is a iShares Large Blend fund. So, what’s the difference between IAU and QUAL? And which fund is better?

The expense ratio of IAU is 0.10 percentage points higher than QUAL’s (0.25% vs. 0.15%). IAU also has a lower exposure to the technology sector and a higher standard deviation. Overall, IAU has provided lower returns than QUAL over the past 7 years.

In this article, we’ll compare IAU vs. QUAL. We’ll look at industry exposure and performance, as well as at their holdings and risk metrics. Moreover, I’ll also discuss IAU’s and QUAL’s annual returns, portfolio growth, and fund composition and examine how these affect their overall returns.

Summary

IAU QUAL
Name iShares Gold Trust iShares MSCI USA Quality Factor ETF
Category N/A Large Blend
Issuer iShares iShares
AUM 28.61B 23.93B
Avg. Return 6.03% 13.42%
Div. Yield 0.0% 1.29%
Expense Ratio 0.25% 0.15%

The iShares Gold Trust (IAU) is a N/A fund that is issued by iShares. It currently has 28.61B total assets under management and has yielded an average annual return of 6.03% over the past 10 years. The fund has a dividend yield of 0.0% with an expense ratio of 0.25%.

The iShares MSCI USA Quality Factor ETF (QUAL) is a Large Blend fund that is issued by iShares. It currently has 23.93B total assets under management and has yielded an average annual return of 13.42% over the past 10 years. The fund has a dividend yield of 1.29% with an expense ratio of 0.15%.

IAU’s dividend yield is 1.29% lower than that of QUAL (0.0% vs. 1.29%). Also, IAU yielded on average 7.39% less per year over the past decade (6.03% vs. 13.42%). The expense ratio of IAU is 0.10 percentage points higher than QUAL’s (0.25% vs. 0.15%).

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Fund Composition

Industry Exposure

IAU vs. QUAL - Industry Exposure

IAU QUAL
Technology 0.0% 22.52%
Industrials 0.0% 9.22%
Energy 0.0% 2.24%
Communication Services 0.0% 11.44%
Utilities 0.0% 2.41%
Healthcare 0.0% 13.22%
Consumer Defensive 0.0% 8.57%
Real Estate 0.0% 2.72%
Financial Services 0.0% 15.87%
Consumer Cyclical 0.0% 9.43%
Basic Materials 0.0% 2.35%

The iShares Gold Trust (IAU) has the most exposure to the Technology sector at 0.0%. This is followed by Industrials and Energy at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Real Estate (0.0%) only make up 0.00% of the fund’s total assets.

IAU’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, and Energy stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.

The iShares MSCI USA Quality Factor ETF (QUAL) has the most exposure to the Technology sector at 22.52%. This is followed by Financial Services and Healthcare at 15.87% and 13.22% respectively. Basic Materials (2.35%), Utilities (2.41%), and Real Estate (2.72%) only make up 7.48% of the fund’s total assets.

QUAL’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Consumer Cyclical, Communication Services, and Healthcare stocks at 8.57%, 9.22%, 9.43%, 11.44%, and 13.22%.

IAU is 22.52% less exposed to the Technology sector than QUAL (0.0% vs 22.52%). IAU’s exposure to Industrials and Energy stocks is 9.22% lower and 2.24% lower respectively (0.0% vs. 9.22% and 0.0% vs. 2.24%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 28.02% less of the fund’s holdings compared to QUAL (0.00% vs. 28.02%).

Holdings

IAU - Holdings

IAU Holdings Weight
Gold 100.0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%

IAU’s Top Holdings are Gold, N/A, N/A, N/A, and N/A at 100.0%, 0%, 0%, 0%, and 0%.

N/A (0%), N/A (0%), and N/A (0%) have a slightly smaller but still significant weight. N/A and N/A are also represented in the IAU’s holdings at 0% and 0%.

QUAL - Holdings

QUAL Holdings Weight
Facebook Inc Class A 4.77%
Nike Inc Class B 4.05%
Microsoft Corp 3.54%
Apple Inc 3.52%
Johnson & Johnson 2.99%
BlackRock Inc 2.87%
Target Corp 2.8%
Mastercard Inc Class A 2.72%
NVIDIA Corp 2.71%
Alphabet Inc Class A 2.49%

QUAL’s Top Holdings are Facebook Inc Class A, Nike Inc Class B, Microsoft Corp, Apple Inc, and Johnson & Johnson at 4.77%, 4.05%, 3.54%, 3.52%, and 2.99%.

BlackRock Inc (2.87%), Target Corp (2.8%), and Mastercard Inc Class A (2.72%) have a slightly smaller but still significant weight. NVIDIA Corp and Alphabet Inc Class A are also represented in the QUAL’s holdings at 2.71% and 2.49%.

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Risk Analysis

IAU QUAL
Mean Return 0.23 0
R-squared 16.03 0
Std. Deviation 16.97 0
Alpha 4.16 0
Beta 0.48 0
Sharpe Ratio 0.13 0
Treynor Ratio 1.5 0

The iShares Gold Trust (IAU) has a Alpha of 4.16 with a Sharpe Ratio of 0.13 and a Mean Return of 0.23. Its Standard Deviation is 16.97 while IAU’s R-squared is 16.03. Furthermore, the fund has a Treynor Ratio of 1.5 and a Beta of 0.48.

The iShares MSCI USA Quality Factor ETF (QUAL) has a Standard Deviation of 0 with a Treynor Ratio of 0 and a Mean Return of 0. Its Beta is 0 while QUAL’s Sharpe Ratio is 0. Furthermore, the fund has a Alpha of 0 and a R-squared of 0.

IAU’s Mean Return is 0.23 points higher than that of QUAL and its R-squared is 16.03 points higher. With a Standard Deviation of 16.97, IAU is slightly more volatile than QUAL. The Alpha and Beta of IAU are 4.16 points higher and 0.48 points higher than QUAL’s Alpha and Beta.

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Performance

Annual Returns

IAU vs. QUAL - Annual Returns

Year IAU QUAL
2020 23.86% 16.96%
2019 18.54% 34.14%
2018 -1.39% -5.77%
2017 11.58% 22.26%
2016 8.85% 9.18%
2015 -11.65% 5.56%
2014 -0.44% 11.62%
2013 -27.96% 0.0%
2012 8.37% 0.0%
2011 8.66% 0.0%
2010 27.93% 0.0%

IAU had its best year in 2010 with an annual return of 27.93%. IAU’s worst year over the past decade yielded -27.96% and occurred in 2013. In most years the iShares Gold Trust provided moderate returns such as in 2012, 2011, and 2016 where annual returns amounted to 8.37%, 8.66%, and 8.85% respectively.

The year 2019 was the strongest year for QUAL, returning 34.14% on an annual basis. The poorest year for QUAL in the last ten years was 2018, with a yield of -5.77%. Most years the iShares MSCI USA Quality Factor ETF has given investors modest returns, such as in 2010, 2015, and 2016, when gains were 0.0%, 5.56%, and 9.18% respectively.

Portfolio Growth

IAU vs. QUAL - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IAU $10,000 $15,467 6.03%
QUAL $10,000 $23,251 13.42%

A $10,000 investment in IAU would have resulted in a final balance of $15,467. This is a profit of $5,467 over 7 years and amounts to a compound annual growth rate (CAGR) of 6.03%.

With a $10,000 investment in QUAL, the end total would have been $23,251. This equates to a $13,251 profit over 7 years and a compound annual growth rate (CAGR) of 13.42%.

IAU’s CAGR is 7.39 percentage points lower than that of QUAL and as a result, would have yielded $7,784 less on a $10,000 investment. Thus, IAU performed worse than QUAL by 7.39% annually.


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