Back to top

Image: Bigstock

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

Read MoreHide Full Article

The SPDR Russell 1000 Low Volatility Focus ETF (ONEV - Free Report) made its debut on 12/02/2015, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large Cap Blend 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.

A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.

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.

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 $700.56 million, which makes it one of the average sized ETFs in the Style Box - Large Cap Blend. Before fees and expenses, ONEV seeks to match the performance of the Russell 1000 Low Volatility Focused Factor Index.

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.

Operating expenses on an annual basis are 0.20% for this ETF, which makes it on par with most peer products in the space.

It's 12-month trailing dividend yield comes in at 1.72%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

For ONEV, it has heaviest allocation in the Industrials sector --about 19.50% of the portfolio --while Healthcare and Financials round out the top three.

Taking into account individual holdings, Cognizant Tech Solutions A (CTSH - Free Report) accounts for about 1.41% of the fund's total assets, followed by Bristol Myers Squibb Co (BMY - Free Report) and Arch Capital Group Ltd (ACGL - Free Report) .

The top 10 holdings account for about 9.38% of total assets under management.

Performance and Risk

So far this year, ONEV has gained about 12.80%, and is up roughly 28.06% in the last one year (as of 11/01/2024). During this past 52-week period, the fund has traded between $103.50 and $130.94.

ONEV has a beta of 0.97 and standard deviation of 15.31% for the trailing three-year period. With about 433 holdings, it effectively diversifies company-specific risk.

Alternatives

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

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 $540 billion in assets, SPDR S&P 500 ETF has $588.42 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.

Published in