Is Oshares U.S. Quality Dividend ETF (OUSA) a Strong ETF Right Now?
Smart Beta ETF report for OUSA
Making its debut on 07/14/2015, smart beta exchange traded fund Oshares U.S. Quality Dividend ETF (OUSA) provides investors broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix 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 Oshares Investments, OUSA has amassed assets over $700.73 million, making it one of the average sized ETFs in the Style Box - Large Cap Value. OUSA, before fees and expenses, seeks to match the performance of the FTSE US Qual / Vol / Yield Factor 5% Capped Index.
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
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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.48%.
OUSA's 12-month trailing dividend yield is 1.75%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
Representing 23.70% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Healthcare and Consumer Staples round out the top three.
Looking at individual holdings, Microsoft Corp (MSFT) accounts for about 5.39% of total assets, followed by Home Depot Inc/the (HD) and Johnson & Johnson (JNJ).
The top 10 holdings account for about 38.08% of total assets under management.
Performance and Risk
The ETF return is roughly 12.36% so far this year and is up about 17.03% in the last one year (as of 10/06/2021). In the past 52-week period, it has traded between $34.51 and $44.42.
The ETF has a beta of 0.87 and standard deviation of 20.44% for the trailing three-year period, making it a medium risk choice in the space. With about 101 holdings, it effectively diversifies company-specific risk.
Oshares U.S. Quality Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
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 $53.92 billion in assets, Vanguard Value ETF has $82.97 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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