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Is ALPS O'Shares U.S. Small-Cap Quality Dividend ETF (OUSM) a Strong ETF Right Now?
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Launched on 12/30/2016, the ALPS O'Shares U.S. Small-Cap Quality Dividend ETF (OUSM - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Small 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.
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.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Managed by Alps, OUSM has amassed assets over $845.08 million, making it one of the average sized ETFs in the Style Box - Small Cap Blend. This particular fund, before fees and expenses, seeks to match the performance of the FTSE Russell US Qual / Vol / Yield Factor 3% Capped Index.
The OShares U.S. Small-Cap Quality Dividend Index is designed to reflect the performance of publicly-listed small-capitalization dividend-paying issuers in the United States exhibiting high quality, low volatility and high dividend yields.
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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.48%.
The fund has a 12-month trailing dividend yield of 1.23%.
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.
For OUSM, it has heaviest allocation in the Financials sector --about 33.80% of the portfolio --while Industrials and Consumer Discretionary round out the top three.
Taking into account individual holdings, Houlihan Lokey Inc. (HLI - Free Report) accounts for about 2.26% of the fund's total assets, followed by Sei Investments Co. (SEIC - Free Report) and Lincoln Electric Holdings Inc. (LECO - Free Report) .
OUSM's top 10 holdings account for about 21.32% of its total assets under management.
Performance and Risk
The ETF return is roughly 12.88% so far this year and is up about 13.55% in the last one year (as of 12/20/2024). In the past 52-week period, it has traded between $38.28 and $47.20.
The ETF has a beta of 1.05 and standard deviation of 16.92% for the trailing three-year period. With about 111 holdings, it effectively diversifies company-specific risk.
Alternatives
ALPS O'Shares U.S. Small-Cap Quality Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 2000 ETF (IWM - Free Report) tracks Russell 2000 Index and the iShares Core S&P Small-Cap ETF (IJR - Free Report) tracks S&P SmallCap 600 Index. IShares Russell 2000 ETF has $75.98 billion in assets, iShares Core S&P Small-Cap ETF has $87.43 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.
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 - Small 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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Is ALPS O'Shares U.S. Small-Cap Quality Dividend ETF (OUSM) a Strong ETF Right Now?
Launched on 12/30/2016, the ALPS O'Shares U.S. Small-Cap Quality Dividend ETF (OUSM - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Small 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.
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.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Managed by Alps, OUSM has amassed assets over $845.08 million, making it one of the average sized ETFs in the Style Box - Small Cap Blend. This particular fund, before fees and expenses, seeks to match the performance of the FTSE Russell US Qual / Vol / Yield Factor 3% Capped Index.
The OShares U.S. Small-Cap Quality Dividend Index is designed to reflect the performance of publicly-listed small-capitalization dividend-paying issuers in the United States exhibiting high quality, low volatility and high dividend yields.
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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.48%.
The fund has a 12-month trailing dividend yield of 1.23%.
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.
For OUSM, it has heaviest allocation in the Financials sector --about 33.80% of the portfolio --while Industrials and Consumer Discretionary round out the top three.
Taking into account individual holdings, Houlihan Lokey Inc. (HLI - Free Report) accounts for about 2.26% of the fund's total assets, followed by Sei Investments Co. (SEIC - Free Report) and Lincoln Electric Holdings Inc. (LECO - Free Report) .
OUSM's top 10 holdings account for about 21.32% of its total assets under management.
Performance and Risk
The ETF return is roughly 12.88% so far this year and is up about 13.55% in the last one year (as of 12/20/2024). In the past 52-week period, it has traded between $38.28 and $47.20.
The ETF has a beta of 1.05 and standard deviation of 16.92% for the trailing three-year period. With about 111 holdings, it effectively diversifies company-specific risk.
Alternatives
ALPS O'Shares U.S. Small-Cap Quality Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 2000 ETF (IWM - Free Report) tracks Russell 2000 Index and the iShares Core S&P Small-Cap ETF (IJR - Free Report) tracks S&P SmallCap 600 Index. IShares Russell 2000 ETF has $75.98 billion in assets, iShares Core S&P Small-Cap ETF has $87.43 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.
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 - Small 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.