Is SPDR Russell 1000 Yield Focus ETF (ONEY) a Strong ETF Right Now?
The SPDR Russell 1000 Yield Focus ETF (ONEY) was launched on 12/02/2015, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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
Managed by State Street Global Advisors, ONEY has amassed assets over $815.98 million, making it one of the average sized ETFs in the Style Box - Large Cap Value. Before fees and expenses, ONEY 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 core factors high value, high quality, and low size characteristics, with a focus factor comprising high yield characteristics.
Cost & Other Expenses
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.
Operating expenses on an annual basis are 0.20% for this ETF, which makes it one of the cheaper products in the space.
The fund has a 12-month trailing dividend yield of 2.98%.
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.
This ETF has heaviest allocation in the Financials sector - about 18.80% of the portfolio. Energy and Consumer Discretionary round out the top three.
Taking into account individual holdings, Pioneer Natural Resources Co (PXD) accounts for about 1.57% of the fund's total assets, followed by Dow Inc (DOW) and Devon Energy Corp (DVN).
The top 10 holdings account for about 12.83% of total assets under management.
Performance and Risk
Year-to-date, the SPDR Russell 1000 Yield Focus ETF has gained about 7.79% so far, and was up about 22.23% over the last 12 months (as of 03/28/2024). ONEY has traded between $86.22 and $107.79 in this past 52-week period.
The ETF has a beta of 1.12 and standard deviation of 17.11% for the trailing three-year period. With about 303 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR Russell 1000 Yield Focus 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 $56.15 billion in assets, Vanguard Value ETF has $115.47 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.
Bottom Line
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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SPDR Russell 1000 Yield Focus ETF (ONEY): ETF Research Reports
Devon Energy Corporation (DVN) : Free Stock Analysis Report
Pioneer Natural Resources Company (PXD) : Free Stock Analysis Report
Dow Inc. (DOW) : Free Stock Analysis Report
Vanguard Value ETF (VTV): ETF Research Reports
iShares Russell 1000 Value ETF (IWD): ETF Research Reports
