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

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The SPDR Russell 1000 Yield Focus ETF (ONEY - Free Report) was launched on 12/02/2015, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Large Cap Value 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.

Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.

There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.

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.

This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.

Fund Sponsor & Index

Managed by State Street Global Advisors, ONEY has amassed assets over $845.66 million, making it one of the average sized ETFs in the Style Box - Large Cap Value. Before fees and expenses, ONEY 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

For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.

Operating expenses on an annual basis are 0.20% for ONEY, making it on par with most peer products in the space.

The fund has a 12-month trailing dividend yield of 3.21%.

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 16.20% of the portfolio. Consumer Discretionary and Industrials round out the top three.

When you look at individual holdings, Phillips 66 (PSX - Free Report) accounts for about 1.88% of the fund's total assets, followed by Gilead Sciences Inc. (GILD - Free Report) and Hp Inc. (HPQ - Free Report) .

Its top 10 holdings account for approximately 12.96% of ONEY's total assets under management.

Performance and Risk

The ETF has lost about -1.46% and is down about -2.09% so far this year and in the past one year (as of 03/15/2023), respectively. ONEY has traded between $83.32 and $104.60 during this last 52-week period.

ONEY has a beta of 1.11 and standard deviation of 26.81% for the trailing three-year period. With about 300 holdings, it effectively diversifies company-specific risk.

Alternatives

SPDR Russell 1000 Yield Focus ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.

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 $49.71 billion in assets, Vanguard Value ETF has $99.13 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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