Is Oshares U.S. Quality Dividend ETF (OUSA) a Strong ETF Right Now?
Smart Beta ETF report for OUSA
The Oshares U.S. Quality Dividend ETF (OUSA) made its debut on 07/14/2015, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large Cap Value 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
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
The fund is managed by Oshares Investments. OUSA has been able to amass assets over $734.13 million, making it one of the average sized ETFs in the Style Box - Large Cap Value. OUSA seeks to match the performance of the FTSE US Qual / Vol / Yield Factor 5% Capped Index before fees and expenses.
The FTSE US Qual / Vol / Yield Factor 5% Capped Index measures the performance of publicly-listed large-capitalization and mid-capitalization dividend-paying issuers in the United States.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for OUSA are 0.48%, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.60%.
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.
Representing 23.50% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Healthcare and Consumer Staples round out the top three.
When you look at individual holdings, Microsoft Corp (MSFT) accounts for about 5.39% of the fund's total assets, followed by Home Depot Inc/the (HD) and Johnson & Johnson (JNJ).
Its top 10 holdings account for approximately 38.08% of OUSA's total assets under management.
Performance and Risk
So far this year, OUSA has gained about 17.31%, and is up about 19.74% in the last one year (as of 08/30/2021). During this past 52-week period, the fund has traded between $34.51 and $44.42.
OUSA has a beta of 0.86 and standard deviation of 20.33% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 101 holdings, it effectively diversifies company-specific risk.
Oshares U.S. Quality Dividend 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) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $55.46 billion in assets, Vanguard Value ETF has $85.10 billion. IWD has an expense ratio of 0.19% 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.
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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Oshares U.S. Quality Dividend ETF (OUSA): ETF Research Reports
Microsoft Corporation (MSFT): Free Stock Analysis Report
Johnson & Johnson (JNJ): Free Stock Analysis Report
The Home Depot, Inc. (HD): Free Stock Analysis Report
Vanguard Value ETF (VTV): ETF Research Reports
iShares Russell 1000 Value ETF (IWD): ETF Research Reports
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