If you're interested in broad exposure to the Large Cap Value segment of the US equity market, look no further than the OShares FTSE U.S. Quality Dividend ETF (OUSA), a passively managed exchange traded fund launched on 07/14/2015.
The fund is sponsored by Oshares Investments. It has amassed assets over $443.60 M, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Large cap companies typically have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.
While value stocks have lower than average price-to-earnings and price-to-book ratios, they also have lower than average sales and earnings growth rates. Value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value stocks in strong bull markets.
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.
Annual operating expenses for this ETF are 0.48%, making it one of the more expensive products in the space.
It has a 12-month trailing dividend yield of 2.22%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Consumer Staples sector--about 17.20% of the portfolio. Information Technology and Industrials round out the top three.
Looking at individual holdings, Johnson & Johnson (JNJ) accounts for about 4.80% of total assets, followed by Exxon Mobil Corporation (XOM) and Intel Corp (INTC).
The top 10 holdings account for about 34.02% of total assets under management.
Performance and Risk
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.
The ETF has lost about -5.17% so far this year and was up about 6.45% in the last one year (as of 04/25/2018). In the past 52-week period, it has traded between $28.72 and $33.39.
The ETF has a beta of 0.80 and standard deviation of 11.36% for the trailing three-year period, making it a medium risk choice in the space. With about 143 holdings, it effectively diversifies company-specific risk.
OShares FTSE U.S. Quality Dividend ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, OUSA is an outstanding option for investors seeking exposure to the Large Cap ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Vanguard Value ETF (VTV) and the iShares Russell 1000 Value ETF (IWD) track a similar index. While Vanguard Value ETF has $35.75 B in assets, iShares Russell 1000 Value ETF has $36.33 B. VTV has an expense ratio of 0.06% and IWD charges 0.20%.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
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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Johnson & Johnson (JNJ) : Free Stock Analysis Report
VIPERS-VALUE (VTV): ETF Research Reports
ISHARS-RS 1K VL (IWD): ETF Research Reports
OSHRS-FT QL DV (OUSA): ETF Research Reports
Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
Intel Corporation (INTC) : Free Stock Analysis Report
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