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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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Launched on 12/30/2016, the ALPS O'Shares U.S. Small-Cap Quality Dividend ETF (OUSM - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Small Cap Blend category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Managed by Alps, OUSM has amassed assets over $777.63 million, making it one of the average sized ETFs in the Style Box - Small Cap Blend. This particular fund seeks to match the performance of the FTSE Russell US Qual / Vol / Yield Factor 3% Capped Index before fees and expenses.
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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for this ETF are 0.48%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.06%.
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 Financials sector, which is about 35.20% of the portfolio. Its Industrials and Consumer Discretionary round out the top three.
When you look at individual holdings, An O Smith Corp. (AOS - Free Report) accounts for about 2.13% of the fund's total assets, followed by Lincoln Electric Holdings Inc. (LECO - Free Report) and Msc Industrial Direct Co. Inc. (MSM - Free Report) .
OUSM's top 10 holdings account for about 20.52% of its total assets under management.
Performance and Risk
The ETF has gained about 15.89% and is up about 31.28% so far this year and in the past one year (as of 10/15/2024), respectively. OUSM has traded between $33.36 and $45.10 during this last 52-week period.
The ETF has a beta of 1.04 and standard deviation of 16.88% for the trailing three-year period. With about 112 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 $69.73 billion in assets, iShares Core S&P Small-Cap ETF has $86.45 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?
Launched on 12/30/2016, the ALPS O'Shares U.S. Small-Cap Quality Dividend ETF (OUSM - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Small Cap Blend category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Managed by Alps, OUSM has amassed assets over $777.63 million, making it one of the average sized ETFs in the Style Box - Small Cap Blend. This particular fund seeks to match the performance of the FTSE Russell US Qual / Vol / Yield Factor 3% Capped Index before fees and expenses.
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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for this ETF are 0.48%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.06%.
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 Financials sector, which is about 35.20% of the portfolio. Its Industrials and Consumer Discretionary round out the top three.
When you look at individual holdings, An O Smith Corp. (AOS - Free Report) accounts for about 2.13% of the fund's total assets, followed by Lincoln Electric Holdings Inc. (LECO - Free Report) and Msc Industrial Direct Co. Inc. (MSM - Free Report) .
OUSM's top 10 holdings account for about 20.52% of its total assets under management.
Performance and Risk
The ETF has gained about 15.89% and is up about 31.28% so far this year and in the past one year (as of 10/15/2024), respectively. OUSM has traded between $33.36 and $45.10 during this last 52-week period.
The ETF has a beta of 1.04 and standard deviation of 16.88% for the trailing three-year period. With about 112 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 $69.73 billion in assets, iShares Core S&P Small-Cap ETF has $86.45 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.