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Is SPDR Russell 1000 Yield Focus ETF (ONEY) a Strong ETF Right Now?

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A smart beta exchange traded fund, the SPDR Russell 1000 Yield Focus ETF (ONEY - Free Report) debuted on 12/02/2015, and offers broad exposure to the Style Box - Large Cap Value 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.

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.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

Because the fund has amassed over $898.17 million, this makes it one of the average sized ETFs in the Style Box - Large Cap Value. ONEY is managed by State Street Global Advisors. Before fees and expenses, this particular fund seeks to match the performance of the Russell 1000 Yield Focused Factor Index.

The Russell 1000 Yield Focused Factor Index reflects the performance of a segment of large-capitalization U.S. equity securities demonstrating a combination of core factors high value, high quality, and low size characteristics, with a focus factor comprising high yield characteristics.

Cost & Other Expenses

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.

Operating expenses on an annual basis are 0.20% for this ETF, which makes it on par with most peer products in the space.

ONEY's 12-month trailing dividend yield is 3.05%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

ONEY's heaviest allocation is in the Financials sector, which is about 18.60% of the portfolio. Its Consumer Discretionary and Industrials round out the top three.

Taking into account individual holdings, Hp Inc. (HPQ - Free Report) accounts for about 1.87% of the fund's total assets, followed by Phillips 66 (PSX - Free Report) and T. Rowe Price Group (TROW - Free Report) .

The top 10 holdings account for about 12.44% of total assets under management.

Performance and Risk

The ETF has added about 3.85% and is down about -1.59% so far this year and in the past one year (as of 01/11/2023), respectively. ONEY has traded between $83.32 and $104.60 during this last 52-week period.

The fund has a beta of 1.10 and standard deviation of 29.26% for the trailing three-year period. With about 300 holdings, it effectively diversifies company-specific risk.

Alternatives

SPDR Russell 1000 Yield Focus ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.

IShares Russell 1000 Value ETF (IWD - Free Report) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $55.27 billion in assets, Vanguard Value ETF has $99.76 billion. IWD has an expense ratio of 0.18% and VTV charges 0.04%.

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 - Large Cap Value.

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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