What Is the USMC ETF? Returns, Expense Ratio, Holdings and Alternative ETFs Explained
The Principal U.S. Mega-Cap ETF (USMC) holds a concentrated portfolio of the largest U.S. stocks, using rule-based weighting. It is seen as a core alternative for U.S. large-cap exposure, and worth weighing on outlook, distributions, expense level, stock concentration and trading liquidity.
SubscribeWhat Is the Principal U.S. Mega-Cap ETF?
This is a rule-based ETF that tracks the largest U.S. companies. The top tier by market capitalization is weighted by market cap, while the tier below it is equal-weighted with a volatility factor added. The result is a portfolio concentrated in a small number of stocks.
It suits long-term investors who want to put their money mainly in U.S. mega-cap stocks, but prefer a weighting approach that is not purely market-cap based.
It is a passive (index-tracking) ETF managed by Principal Asset Management.
How Does the Principal U.S. Mega-Cap ETF Invest?
| Item | Details |
|---|---|
| Tracked index | U.S. mega-cap rule-based index |
| Management style | Rule-based passive (index-tracking) |
| Rebalancing frequency | Periodic rebalancing |
| Dividend/distribution frequency | Quarterly distributions |
| Expense ratio | 0.12% |
| Manager | Principal Asset Management |
U.S.-listed companies are divided by market capitalization into an upper tier and a lower tier. The upper tier is weighted by market cap, while the lower tier is equal-weighted with a volatility factor reflected. The structure maintains mega-cap exposure while slightly easing the concentration in the few largest holdings.
- A two-tier weighting structure that blends market-cap weighting and equal weighting in a single fund
- A concentrated portfolio narrowed to mega-cap stocks
- A lower number of holdings than broad-index funds
Principal U.S. Mega-Cap ETF Size and Costs (AUM and Management Fee)
Assets under management (AUM) stand at $4.9B, and the expense ratio is 0.12% per year.
Trading volume is thinner than for broad core funds, so it is wise to check the bid-ask spread before trading.
Principal U.S. Mega-Cap ETF Performance and Trends
1-Year Price Performance
Dividend & Yield
52-Week Price RangeIts performance is heavily driven by how U.S. mega-cap stocks fare. When large technology stocks lead the market, it tends to move similarly to the overall market index, but when leading stocks falter, the small number of holdings can make price swings larger.
In the U.S. large-cap core space, ultra-low-cost broad index funds have absorbed most of the inflows. Funds like this one, which tweak the weighting rules, sit in the position of capturing demand for alternatives, so fund flows vary with market conditions.
Principal U.S. Mega-Cap ETF Pros and Cons
Its strength is that it refines mega-cap exposure through rules, while the drawback is that a small number of holdings means individual stocks have a large impact.
💪 Key Strengths
⚠️ Points to Watch
Principal U.S. Mega-Cap ETF Alternative ETFs and Related Products
Of the funds shown in the table, ITOT ETF and SCHB ETF are broad core funds that cover the entire U.S. market at a lower expense ratio, and IWV ETF is also a broad index fund. Closest in character to mega-cap exposure is OEF ETF, which holds the top group of U.S. large-cap companies and is worth comparing on expense ratio and fund size. Beyond the table, VOO, an S&P 500 core fund, RSP, an equal-weighted fund, and QQQ, which focuses on large growth stocks, can also be placed side by side, which makes the differences in character clear.
Peer Comparison ETFs| Ticker | Name | Price | Change | AUM | Total Expense Ratio | Dividend Yield | 1Y |
|---|---|---|---|---|---|---|---|
 ITOT | iShares Core S&P Total U.S. Stock Market ETF | $164.70 | +0.3% | $95.1B | 0.03% | 1.02% | +10.4% |
 SCHB | Schwab U.S. Broad Market ETF | $29.04 | +0.3% | $44.0B | 0.03% | 1.06% | +10.4% |
 VXF | Vanguard Extended Market Index ETF | $231.65 | +0.6% | $30.2B | 0.05% | 1.05% | +9.7% |
 IWV | iShares Russell 3000 ETF | $428.45 | +0.3% | $20.1B | 0.20% | 0.88% | +10.5% |
 OEF | iShares S&P 100 Fund | $372.09 | +0.4% | $19.9B | 0.20% | 0.88% | +7.5% |
Top Holdings| Ticker | Name | Weight | Price | Change | Market Cap | P/E | Dividend Yield |
|---|---|---|---|---|---|---|---|
| MU | Micron Technology Inc | 0.09% | $855.10 | +2.6% | $967.5B | 11.5 | 0.08% |
| NVDA | NVIDIA Corp | 0.15% | $206.69 | +2.3% | $4.98T | 26.1 | 0.38% |
| AAPL | Apple Inc | 0.13% | $331.90 | -1.9% | $4.84T | 37.0 | 0.35% |
| GOOG | Alphabet Inc | 0.06% | $278.27 | +0.1% | $3.41T | 14.5 | 0.31% |
| GOOGL | Alphabet Inc | 0.05% | $280.03 | +0.4% | $3.42T | 14.6 | 0.31% |
| MSFT | Microsoft Corp | 0.05% | $520.99 | +2.7% | $3.87T | 27.2 | 0.74% |
| AVGO | Broadcom Inc | 0.05% | $332.13 | +3.1% | $1.59T | 42.4 | 0.79% |
| NFLX | Netflix Inc | 0.05% | $63.42 | +1.7% | $260.4B | 18.3 | - |
Principal U.S. Mega-Cap ETF Investor Checkpoints
Here are the points to review before investing. Because this fund concentrates U.S. mega-cap stocks into a small number of holdings, it is best to check three things first: expense level, concentration in top holdings, and trading liquidity.
| Checkpoint | What to check | Current status |
|---|---|---|
| 💵 Expense ratio | Check the cumulative cost impact over a long holding period | Higher than broad core funds |
| 📊 Stock concentration | Weight of top holdings and trend in number of holdings | High concentration |
| 💧 Liquidity | Check daily trading value and bid-ask spread | Needs checking |
| 💱 Exchange rate | Impact on returns converted to Korean won | Not currency-hedged |
Because performance is tied to a small number of mega-cap stocks, declines can be larger when leading stocks falter. Trading volume is not deep, so execution prices may be unfavorable during sharp market swings.
It is worth considering if you want to focus on U.S. mega-cap stocks while avoiding purely market-cap weighting. If cost is your priority, look at broad core funds. If you want more mega-cap character, take a closer look at this fund.
SubscribeDisclaimer: This content is for informational purposes only and does not constitute investment advice. All investment responsibility lies with the investor.
This article reflects information as of September 3, 2026.
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