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

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The SPDR Russell 1000 Low Volatility Focus ETF (ONEV - 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 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 work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.

However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: 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.

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 State Street Global Advisors, and has been able to amass over $548.10 million, which makes 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

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 ONEV are 0.20%, which makes it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.78%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, 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 20.70% of the portfolio. Its Financials and Information Technology round out the top three.

Looking at individual holdings, Willis Towers Watson Public Limited Company (WTW - Free Report) accounts for about 1.25% of total assets, followed by Mckesson Corporation (MCK - Free Report) and Hp Inc. (HPQ - Free Report) .

ONEV's top 10 holdings account for about 8.42% of its total assets under management.

Performance and Risk

Year-to-date, the SPDR Russell 1000 Low Volatility Focus ETF has added roughly 3.59% so far, and was up about 10.69% over the last 12 months (as of 06/14/2023). ONEV has traded between $91.93 and $111.40 in this past 52-week period.

The ETF has a beta of 0.97 and standard deviation of 16.60% for the trailing three-year period. With about 478 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 $323.97 billion in assets, SPDR S&P 500 ETF has $414.10 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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