The ALPS (OUSA) made its debut on 07/14/2015, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
Because the fund has amassed over $815.27 million, this makes it one of the average sized ETFs in the Style Box - Large Cap Value. OUSA is managed by Alps. OUSA, before fees and expenses, seeks to match the performance of the FTSE US Qual / Vol / Yield Factor 5% Capped Index.
The OShares U.S. Quality Dividend Index measures the performance of publicly-listed large-capitalization and mid-capitalization dividend-paying issuers in the United States.
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 0.48% for this ETF, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.52%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
This ETF has heaviest allocation in the Financials sector - about 22.80% of the portfolio. Information Technology and Healthcare round out the top three.
Looking at individual holdings, Apple Inc. (AAPL) accounts for about 5.17% of total assets, followed by Microsoft Corp. (MSFT) and Jpmorgan Chase & Co. (JPM).
The top 10 holdings account for about 40.51% of total assets under management.
Performance and Risk
Year-to-date, the ALPS return is roughly 17.49% so far, and it's up approximately 27.48% over the last 12 months (as of 09/25/2024). OUSA has traded between $40.56 and $53.59 in this past 52-week period.
OUSA has a beta of 0.88 and standard deviation of 14% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 101 holdings, it effectively diversifies company-specific risk.
Alternatives
ALPS is an excellent option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
Schwab U.S. Dividend Equity ETF (SCHD) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value ETF (VTV) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $62.43 billion in assets, Vanguard Value ETF has $127.67 billion. SCHD has an expense ratio of 0.06% 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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Get it free >>ALPS (OUSA): ETF Research Reports
JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report
Apple Inc. (AAPL) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
Vanguard Value ETF (VTV): ETF Research Reports
Schwab U.S. Dividend Equity ETF (SCHD): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
