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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) was launched on 12/30/2016, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Small Cap Blend category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by Alps, and has been able to amass over $899.23 million, which makes it one of the average sized ETFs in the Style Box - Small Cap Blend. Before fees and expenses, OUSM 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 OUSM are 0.48%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.08%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Financials sector - about 28.50% of the portfolio. Industrials and Consumer Discretionary round out the top three.
When you look at individual holdings, Sei Investments Co. (SEIC - Free Report) accounts for about 2.53% of the fund's total assets, followed by Dolby Laboratories Inc. (DLB - Free Report) and Houlihan Lokey Inc. (HLI - Free Report) .
Its top 10 holdings account for approximately 21.84% of OUSM's total assets under management.
Performance and Risk
The ETF return is roughly 0.89% and was up about 11.37% so far this year and in the past one year (as of 02/21/2025), respectively. OUSM has traded between $39.56 and $47.20 during this last 52-week period.
The fund has a beta of 1.05 and standard deviation of 16.65% for the trailing three-year period. With about 111 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 $72.62 billion in assets, iShares Core S&P Small-Cap ETF has $87.80 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) was launched on 12/30/2016, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Small Cap Blend category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by Alps, and has been able to amass over $899.23 million, which makes it one of the average sized ETFs in the Style Box - Small Cap Blend. Before fees and expenses, OUSM 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 OUSM are 0.48%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.08%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Financials sector - about 28.50% of the portfolio. Industrials and Consumer Discretionary round out the top three.
When you look at individual holdings, Sei Investments Co. (SEIC - Free Report) accounts for about 2.53% of the fund's total assets, followed by Dolby Laboratories Inc. (DLB - Free Report) and Houlihan Lokey Inc. (HLI - Free Report) .
Its top 10 holdings account for approximately 21.84% of OUSM's total assets under management.
Performance and Risk
The ETF return is roughly 0.89% and was up about 11.37% so far this year and in the past one year (as of 02/21/2025), respectively. OUSM has traded between $39.56 and $47.20 during this last 52-week period.
The fund has a beta of 1.05 and standard deviation of 16.65% for the trailing three-year period. With about 111 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 $72.62 billion in assets, iShares Core S&P Small-Cap ETF has $87.80 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.