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Is SPDR Russell 1000 Low Volatility Focus ETF (ONEV) a Strong ETF Right Now?

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Making its debut on 12/02/2015, smart beta exchange traded fund SPDR Russell 1000 Low Volatility Focus ETF (ONEV - Free Report) provides investors 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.

If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.

By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.

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

Managed by State Street Global Advisors, ONEV has amassed assets over $578.14 million, making it one of the larger ETFs in the Style Box - Large Cap Blend. This particular fund seeks to match the performance of the Russell 1000 Low Volatility Focused Factor Index before fees and expenses.

The Russell 1000 Low Volatility 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 low volatility characteristics.

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.

With on par with most peer products in the space, this ETF has annual operating expenses of 0.20%.

It has a 12-month trailing dividend yield of 1.56%.

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.

ONEV's heaviest allocation is in the Industrials sector, which is about 17.30% of the portfolio. Its Information Technology and Financials round out the top three.

When you look at individual holdings, Cognizant Technology Solutions Corporation Class A (CTSH - Free Report) accounts for about 1.47% of the fund's total assets, followed by Hp Inc. (HPQ - Free Report) and Progressive Corporation (PGR - Free Report) .

Its top 10 holdings account for approximately 8.51% of ONEV's total assets under management.

Performance and Risk

So far this year, ONEV has lost about -6.71%, and is up roughly 1.87% in the last one year (as of 06/01/2022). During this past 52-week period, the fund has traded between $100.48 and $114.25.

The ETF has a beta of 0.97 and standard deviation of 23.85% for the trailing three-year period. With about 436 holdings, it effectively diversifies company-specific risk.

Alternatives

SPDR Russell 1000 Low Volatility 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 $301.13 billion in assets, SPDR S&P 500 ETF has $380.01 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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