What does a quality factor ETF aim to achieve in the stock market?

A quality factor ETF seeks exposure to companies with robust fundamental characteristics, such as stable earnings, manageable debt, and higher profit margins. Unlike traditional index funds that weigh stocks by market capitalisation, these ETFs select constituents based on specific quality metrics. This approach aims to potentially outperform the broader market during downturns or offer more resilience. However, performance depends on market conditions favouring these specific company attributes over others, meaning returns are not guaranteed and can vary significantly compared to standard benchmarks.

What does expense ratio mean for an ETF investor?

The expense ratio represents the annual fee charged by the fund manager to cover operational costs, deducted directly from the fund's assets. It significantly impacts net returns over time. A lower expense ratio means more of the investment return remains with the investor. Even small differences in percentage points can compound over decades, affecting the final portfolio value. Understanding this fee helps investors assess cost efficiency and compare similar funds effectively to ensure they are not paying excessive premiums for potentially similar market exposures.

Why are sector weights not available for these ETFs?

Sector weights indicate how much of a fund's portfolio is allocated to specific industries like technology or healthcare. When 'not available', it means the data provider has not published this breakdown for these specific funds. This lack of transparency makes it difficult to instantly gauge diversification levels. Investors should consult the fund provider's official factsheets for detailed portfolio composition, as sector exposures heavily influence risk and performance, especially when economic conditions shift and impact different industries at varying rates.

How do the expense ratios of QUAL and SPHQ compare?

Both QUAL and SPHQ feature an identical expense ratio of 0.15%. This means there is no cost difference between the two in terms of annual management fees. Investors choosing between them will not face a fee advantage based on this metric. The comparison should therefore focus on other factors such as holdings, index methodology, and dividend yields. Equal fees ensure that net return differences will primarily stem from the underlying performance of each fund's specific stock selection and tracking ability rather than cost drag.

What are the top holdings differences between QUAL and SPHQ?

While both funds include Apple, LRCX, and Visa in their top ten, their primary weights differ. QUAL's largest holding is Microsoft at 7.65%, followed by Apple. In contrast, SPHQ lists Mastercard at 5.81% and Apple at 5.80% as its top positions. SPHQ also includes Netflix and GEV, which are absent from QUAL's top ten, while QUAL features Nvidia and Meta. These variations indicate distinct stock selection outcomes from their respective quality screening methodologies, leading to different concentration risks and sector exposures.

How do the inception dates of QUAL and SPHQ affect their history?

SPHQ has a longer operational history, established in December 2005, compared to QUAL, which launched in July 2013. This suggests SPHQ has navigated more market cycles, including the 2008 financial crisis and the dot-com aftermath, potentially offering more data on durability. QUAL, while younger, has over a decade of performance in the modern factor investing era. Longer history can provide more confidence in strategy consistency, but past performance does not guarantee future results, and both funds track different indices with unique selection criteria.

How do the dividend yields compare between QUAL and SPHQ?

SPHQ currently offers a higher dividend yield of 1.03% compared to QUAL's 0.85%. For income-focused investors, this difference may be significant, as SPHQ provides more cash flow relative to its price. However, yields can fluctuate based on share price movements and corporate dividend policies. A higher yield does not always equate to better total returns. Investors should consider the underlying companies' growth prospects and financial health alongside the yield, as QUAL's lower yield may reflect its concentration in high-growth tech firms that reinvest profits.

What does net asset size indicate for these ETFs?

QUAL commands substantially larger net assets of $47.0 billion compared to SPHQ's $18.6 billion. A larger asset base typically indicates higher liquidity and broader market confidence, often leading to tighter bid-ask spreads during trading. While SPHQ's size is still substantial and likely provides adequate liquidity for most investors, the significant difference highlights QUAL's dominant position in the quality factor ETF market. Investors often prefer larger funds for ease of entry and exit without causing major price impacts on the shares.

How should a beginner interpret the overlap in holdings?

Identifying shared top holdings, such as Apple, LRCX, and Visa, helps investors understand potential correlation. If an investor holds both QUAL and SPHQ, they would have duplicated exposure to these specific companies. While both are 'quality' funds, they track different indices, leading to distinct portfolios. Recognising this overlap allows for better diversification management. An investor might check the weight of these shared stocks to see if they become overly concentrated in a few names across their entire portfolio, impacting overall risk balance.

QUAL vs SPHQ

Two funds, one decision: we compare cost, performance and what each ETF actually holds in October 2026.

Compare QUAL (iShares MSCI USA Quality Factor ETF) and SPHQ (Invesco S&P 500 Quality ETF). This page examines fees, holdings, dividends and how each fund tracks its market to help you understand their differences. Both share a 0.15% expense ratio. Educational content, not financial advice.

Fund Snapshot

Key Fund Metrics

QUAL

Metric

SPHQ

0.15%

Expense Ratio

0.15%

0.85%

Dividend Yield

1.03%

$47.05B

Net Assets

$18.62B

122

Holdings

102

Jul 18, 2013

Inception Date

Dec 6, 2005

–

Index Tracked

–

Large Blend

Fund Category

Large Blend

Both funds charge the same annual fee.

Shared Top Holdings

Holding	QUAL	SPHQ
AAPLApple Inc.	7.27%	5.80%
LRCXLam Research Corporation	3.45%	3.72%
VVisa Inc.	3.20%	5.75%

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Investment Analysis

QUAL

Pros

QUAL offers low costs with a 0.15% expense ratio, enhancing net returns for investors.
It commands substantial net assets of $47.0 billion, indicating strong liquidity and market confidence.
QUAL's inception in July 2013 provides over a decade of operational history in factor investing.

Considerations

Its dividend yield of 0.85% is relatively low compared to SPHQ's 1.03%, limiting income.
QUAL shows high concentration with Microsoft alone at 7.65% within its top holdings.
Sector weightings are not available, reducing transparency into QUAL's specific industry exposures.

SPHQ

Pros

SPHQ provides a comparatively higher yield of 1.03%, offering better income potential than QUAL.
It has the longest history, with an inception date of December 2005, demonstrating durability.
SPHQ features $18.6 billion in assets, confirming substantial size and liquidity in its operations.

Considerations

SPHQ exhibits lower overall asset size than QUAL, potentially impacting its relative liquidity.
It maintains a moderate 0.15% expense ratio, matching QUAL rather than undercutting the cost.
Sector weights are not available for SPHQ, which limits visibility on its investment distribution.

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About QUAL and SPHQ

QUAL (QUAL)

The iShares MSCI USA Quality Factor ETF is a large-cap equity fund designed to capture the performance of US companies with high-quality characteristics. Managed by BlackRock, this exchange-traded fund aims to provide exposure to firms that typically demonstrate strong balance sheets, stable earnings growth, and high return on equity. With a low expense ratio of 0.15%, it offers a cost-effective way for investors to implement a quality-factor strategy within their portfolios. The fund holds approximately 122 stocks and has accumulated significant assets under management, indicating broad institutional adoption. While it provides access to established US corporations, investors should note that all investments carry risk, and past performance does not guarantee future results. It is essential to consider your own financial situation and risk tolerance before investing.

SPHQ (SPHQ)

Invesco S&P 500 Quality ETF (SPHQ) is a passively managed exchange-traded fund that seeks exposure to S&P 500 companies exhibiting quality characteristics such as stronger profitability, stable earnings and lower leverage. It provides investors with a rules-based, diversified way to tilt a large-cap US equity allocation towards firms deemed higher quality within the S&P 500. SPHQ trades like a stock on exchanges, offering intraday liquidity and the convenience of an ETF wrapper, but its share price and NAV can diverge slightly during the trading day. Investors should note this is not an actively managed stockpick — performance follows the underlying index and will rise or fall with market conditions. Consideration should be given to how a quality tilt fits within a broader portfolio, fees, tax treatment and the ETF’s liquidity; past performance does not guarantee future returns and values can go down as well as up.

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QUAL vs SPHQ

Fund Snapshot