Get Factor-Based U.S. Equity ETF Exposure in OUSA
This article was originally published on ETFTrends.com.
The U.S. stock market has presented some conflicting trends this year. On the one hand, investors entered 2023 fearing a recession and an earnings dip. despite those concerns, the S&P 500 has still grown by more than 10% year to date. That said, it’s dipped since finishing a strong period over the summer.
That may invite investors to take a closer look at the U.S. equity ETF, the ALPS O'Shares U.S. Quality Dividend ETF (OUSA) and its factor and cap approach.
OUSA tracks an index that chooses and weights large-cap U.S. stocks. The U.S. equity ETF emphasizes four factors: high quality, low volatility, high dividend yield, and dividend quality. It chooses its constituents from the S-Network U.S. Equity Large-Cap 500 Index. The fund also places a 5% cap at each quarterly rebalance and applies a sector weight cap.
See more: "ETF of the Week: ALPS O’Shares US Small-Cap Quality Dividend ETF (OUSM)"
Why consider such an approach? While many indexed strategies simply copy their indexes or just attempt to replicate them, OUSA adds a helpful spin. That 5% cap, for example, could limit OUSA’s overexposure to some of the more top-heavy names in the S&P 500. While it is indexed and retains those benefits, the quarterly rebalance can also keep OUSA flexible, looking out for positive opportunities.
That sector weight also helps limit exposure if a whole sector struggles. What’s more, the U.S. equity ETF also emphasizes dividends. Not only does a dividend strategy add helpful current income to a portfolio, leaning on dividends can help identify firms with healthy outlooks.
OUSA can present an interesting spin on a standard U.S. equity ETF. The strategy charges a 48 basis point (bps) fee to track its index. Returning 6.8% over the last three years, it may be a solid option for curious investors.
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