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Is ALPS O'Shares U.S. Small-Cap Quality Dividend ETF (OUSM) a Strong ETF Right Now?
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The ALPS O'Shares U.S. Small-Cap Quality Dividend ETF (OUSM - Free Report) made its debut on 12/30/2016, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Small Cap Blend category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by Alps, and has been able to amass over $604.22 million, which makes it one of the average sized ETFs in the Style Box - Small Cap Blend. OUSM, before fees and expenses, seeks to match the performance of the FTSE Russell US Qual / Vol / Yield Factor 3% Capped Index.
The OShares U.S. Small-Cap Quality Dividend Index is designed to reflect the performance of publicly-listed small-capitalization dividend-paying issuers in the United States exhibiting high quality, low volatility and high dividend yields.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.48%, making it one of the more expensive products in the space.
It has a 12-month trailing dividend yield of 1.48%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
OUSM's heaviest allocation is in the Consumer Discretionary sector, which is about 22.90% of the portfolio. Its Financials and Industrials round out the top three.
Looking at individual holdings, Williams-Sonoma Inc. (WSM - Free Report) accounts for about 2.78% of total assets, followed by Lincoln Electric Holdings Inc. (LECO - Free Report) and Juniper Networks Inc. (JNPR - Free Report) .
Its top 10 holdings account for approximately 21.46% of OUSM's total assets under management.
Performance and Risk
The ETF has gained about 5.94% so far this year and was up about 21.41% in the last one year (as of 05/31/2024). In the past 52-week period, it has traded between $33.36 and $42.57.
The fund has a beta of 1.06 and standard deviation of 16.62% for the trailing three-year period. With about 108 holdings, it effectively diversifies company-specific risk.
Alternatives
ALPS O'Shares U.S. Small-Cap Quality Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 2000 ETF (IWM - Free Report) tracks Russell 2000 Index and the iShares Core S&P Small-Cap ETF (IJR - Free Report) tracks S&P SmallCap 600 Index. IShares Russell 2000 ETF has $59.61 billion in assets, iShares Core S&P Small-Cap ETF has $78.55 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Small Cap Blend.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Is ALPS O'Shares U.S. Small-Cap Quality Dividend ETF (OUSM) a Strong ETF Right Now?
The ALPS O'Shares U.S. Small-Cap Quality Dividend ETF (OUSM - Free Report) made its debut on 12/30/2016, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Small Cap Blend category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by Alps, and has been able to amass over $604.22 million, which makes it one of the average sized ETFs in the Style Box - Small Cap Blend. OUSM, before fees and expenses, seeks to match the performance of the FTSE Russell US Qual / Vol / Yield Factor 3% Capped Index.
The OShares U.S. Small-Cap Quality Dividend Index is designed to reflect the performance of publicly-listed small-capitalization dividend-paying issuers in the United States exhibiting high quality, low volatility and high dividend yields.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.48%, making it one of the more expensive products in the space.
It has a 12-month trailing dividend yield of 1.48%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
OUSM's heaviest allocation is in the Consumer Discretionary sector, which is about 22.90% of the portfolio. Its Financials and Industrials round out the top three.
Looking at individual holdings, Williams-Sonoma Inc. (WSM - Free Report) accounts for about 2.78% of total assets, followed by Lincoln Electric Holdings Inc. (LECO - Free Report) and Juniper Networks Inc. (JNPR - Free Report) .
Its top 10 holdings account for approximately 21.46% of OUSM's total assets under management.
Performance and Risk
The ETF has gained about 5.94% so far this year and was up about 21.41% in the last one year (as of 05/31/2024). In the past 52-week period, it has traded between $33.36 and $42.57.
The fund has a beta of 1.06 and standard deviation of 16.62% for the trailing three-year period. With about 108 holdings, it effectively diversifies company-specific risk.
Alternatives
ALPS O'Shares U.S. Small-Cap Quality Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 2000 ETF (IWM - Free Report) tracks Russell 2000 Index and the iShares Core S&P Small-Cap ETF (IJR - Free Report) tracks S&P SmallCap 600 Index. IShares Russell 2000 ETF has $59.61 billion in assets, iShares Core S&P Small-Cap ETF has $78.55 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Small Cap Blend.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.