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Is SPDR Russell 1000 Momentum Focus ETF (ONEO) a Strong ETF Right Now?

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A smart beta exchange traded fund, the SPDR Russell 1000 Momentum Focus ETF (ONEO - Free Report) debuted on 12/02/2015, and offers broad exposure to the Style Box - Large Cap Blend category of the market.

What Are Smart Beta ETFs?

The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.

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.

But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.

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.

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

The fund is managed by State Street Global Advisors. ONEO has been able to amass assets over $299.98 million, making it one of the average sized ETFs in the Style Box - Large Cap Blend. ONEO seeks to match the performance of the Russell 1000 Momentum Focused Factor Index before fees and expenses.

The Russell 1000 Momentum Focused Factor Index reflects the performance of a segment of large-capitalization U.S. equity securities demonstrating a combination of core factors with a focus factor comprising high momentum characteristics.

Cost & Other Expenses

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.20%, making it one of the cheaper products in the space.

The fund has a 12-month trailing dividend yield of 1.19%.

Sector Exposure and Top Holdings

Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.

This ETF has heaviest allocation in the Information Technology sector - about 18.80% of the portfolio. Industrials and Financials round out the top three.

Taking into account individual holdings, Hp Inc. (HPQ - Free Report) accounts for about 1.15% of the fund's total assets, followed by Dell Technologies Inc Class C (DELL - Free Report) and Netapp Inc. (NTAP - Free Report) .

ONEO's top 10 holdings account for about 5.83% of its total assets under management.

Performance and Risk

Year-to-date, the SPDR Russell 1000 Momentum Focus ETF has added roughly 13.95% so far, and is up about 35% over the last 12 months (as of 07/20/2021). ONEO has traded between $70.62 and $99.88 in this past 52-week period.

The fund has a beta of 1.14 and standard deviation of 24.13% for the trailing three-year period. With about 911 holdings, it effectively diversifies company-specific risk.

Alternatives

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

IShares Core S&P 500 ETF (IVV - Free Report) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY - Free Report) tracks S&P 500 Index. IShares Core S&P 500 ETF has $285.53 billion in assets, SPDR S&P 500 ETF has $374.98 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.

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 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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