DDesigned to provide broad exposure to the Style Box – Large Cap Value category of the market, the SPDR Russell 1000 Yield Focus ETF (ONEY) is an exchange traded index fund launched on 02/12/2015.
What are Smart Beta ETFs?
Market-cap-weighted indices were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Market-cap-weighted indices offer an inexpensive, convenient, and transparent way to replicate market returns and are a good option for investors who believe in market efficiency.
But some investors prefer to invest in smart beta funds; these funds follow non-cap-weighted strategies and are a solid option for those who prefer to pick great stocks to beat the market.
In attempting to select stocks that have a better chance of risk-return performance, non-cap-weighted indices are based on certain fundamental characteristics, or a combination thereof.
This area offers many different investment choices, such as the simplest equal weighting, fundamental weighting, and volatility/momentum based weighting methodologies; however, not all of these strategies can yield superior results.
Fund Sponsor and Index
Managed by State Street Global Advisors, ONEY has amassed assets of over $796.25 million, making it one of the mid-size ETFs in the Style Box – Large Cap Value. This particular fund, before fees and expenses, seeks to match the performance of the Russell 1000 Yield Focused Factor Index.
The Russell 1000 Yield Focused Factor Index reflects the performance of a segment of large capitalization U.S. equity securities demonstrating a combination of high value, high quality fundamentals and low size characteristics, with a focus factor including high performance characteristics.
Cost and other expenses
Investors should also pay attention to an ETF’s expense ratio. Lower cost products will perform better than higher cost ones, assuming all other metrics remain the same.
The annual operating expense of this ETF is 0.20%, putting it on par with most peer products on the market.
Its 12-month dividend yield is 2.83%.
Sector exposure and main holdings
It is important to delve into the holdings of an ETF before investing despite the many advantages of these types of funds such as diversified exposure, which minimizes the risk of a single stock. And most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has the largest allocation to the financial services sector – around 19.80% of the portfolio. Basic consumer goods and utilities complete the first three.
In terms of individual holdings, Hp Inc. (HPQ) accounts for approximately 2.23% of total assets, followed by Progressive Corporation (PGR) and Kroger Co. (KR).
The top 10 holdings represent approximately 13.4% of total assets under management.
Performance and risks
Year-to-date, the SPDR Russell 1000 Yield Focus ETF has lost around -7.97% so far and is down around -1.45% over the last 12 months (as of 07/08/ 2022). ONEY has traded between $88.04 and $104.60 over the past 52-week period.
ONEY has a beta of 1.12 and a standard deviation of 28.53% for the three-year period. With approximately 278 holdings, it effectively diversifies company-specific risks.
The SPDR Russell 1000 Yield Focus ETF is an excellent option for investors looking to outperform the Style Box – Large Cap Value segment of the market. There are other ETFs in the space that investors might also consider.
The iShares Russell 1000 Value ETF (IWD) tracks the Russell 1000 Value Index and the Vanguard Value ETF (VTV) tracks the CRSP US Large Cap Value Index. iShares Russell 1000 Value ETF has $51.83 billion in assets, Vanguard Value ETF has $94.48 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.
Investors looking for cheaper, 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, find products that fit your investment goals, and read articles about the latest developments in the ETF investment universe, please visit Zacks ETF Center.
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SPDR Russell 1000 Yield Focus ETF (ONEY): ETF Research Reports
HP Inc. (HPQ): Free Inventory Analysis Report
The Kroger Co. (KR): Free Stock Analysis Report
The Progressive Corporation (PGR): Free Stock Analysis Report
Vanguard Value ETF (VTV): ETF Research Reports
iShares Russell 1000 Value ETF (IWD): ETF Research Reports
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Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.