Making its debut on 07/14/2015, smart beta exchange traded fund Oshares U.S. Quality Dividend ETF (
OUSA Quick Quote OUSA - Free Report) provides investors 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.
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.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
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 Oshares Etfs, and has been able to amass over $821.53 million, which makes it one of the average sized ETFs in the Style Box - Large Cap Value. Before fees and expenses, this particular fund seeks to match the performance of the FTSE US Qual / Vol / Yield Factor 5% Capped Index.
The OShares U.S. Quality Dividend Index measures the performance of publicly-listed large-capitalization and mid-capitalization dividend-paying issuers in the United States.
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 OUSA are 0.48%, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.67%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Healthcare sector - about 24% of the portfolio. Information Technology and Consumer Staples round out the top three.
Taking into account individual holdings, Home Depot Inc/the (
HD Quick Quote HD - Free Report) accounts for about 5.46% of the fund's total assets, followed by Microsoft Corp ( MSFT Quick Quote MSFT - Free Report) and Johnson & Johnson ( JNJ Quick Quote JNJ - Free Report) .
Its top 10 holdings account for approximately 38.91% of OUSA's total assets under management.
Performance and Risk
The ETF has lost about -4.65% and is up about 9.63% so far this year and in the past one year (as of 04/12/2022), respectively. OUSA has traded between $40.74 and $46.65 during this last 52-week period.
OUSA has a beta of 0.87 and standard deviation of 20.16% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 101 holdings, it effectively diversifies company-specific risk.
Oshares U.S. Quality Dividend 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 Quick Quote IWD - Free Report) tracks Russell 1000 Value Index and the Vanguard Value ETF ( VTV Quick Quote VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $57.47 billion in assets, Vanguard Value ETF has $101.70 billion. IWD has an expense ratio of 0.19% 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.
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.