Designed to provide broad exposure to the Style Box - Large Cap Blend category of the market, the SPDR Russell 1000 Momentum Focus ETF (ONEO) is a smart beta exchange traded fund launched on 12/02/2015.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
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
ONEO is managed by State Street Global Advisors, and this fund has amassed over $280.23 million, which makes it one of the average sized ETFs in the Style Box - Large Cap Blend. This particular fund, before fees and expenses, seeks to match the performance of the Russell 1000 Momentum Focused Factor Index.
The Russell 1000 Momentum Focused Factor Index reflects the performance of a segment of large-capitalization U.S. equity securities demonstrating a combination of core factors with a focus factor comprising high momentum characteristics.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for this ETF are 0.20%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.53%.
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.
ONEO's heaviest allocation is in the Information Technology sector, which is about 16.60% of the portfolio. Its Industrials and Financials round out the top three.
Looking at individual holdings, Hp Inc. (HPQ) accounts for about 1.53% of total assets, followed by Mckesson Corporation (MCK) and Marathon Petroleum Corporation (MPC).
ONEO's top 10 holdings account for about 7.1% of its total assets under management.
Performance and Risk
The ETF has lost about -15.44% so far this year and is down about -11.09% in the last one year (as of 09/19/2022). In the past 52-week period, it has traded between $83.57 and $107.45.
ONEO has a beta of 1.07 and standard deviation of 25.56% for the trailing three-year period. With about 896 holdings, it effectively diversifies company-specific risk.
SPDR Russell 1000 Momentum Focus ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P 500 ETF (IVV) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY) tracks S&P 500 Index. IShares Core S&P 500 ETF has $290.39 billion in assets, SPDR S&P 500 ETF has $350.36 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
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 Blend.
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.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
SPDR Russell 1000 Momentum Focus ETF (ONEO): ETF Research Reports
HP Inc. (HPQ): Free Stock Analysis Report
McKesson Corporation (MCK): Free Stock Analysis Report
Marathon Petroleum Corporation (MPC): Free Stock Analysis Report
SPDR S&P 500 ETF (SPY): ETF Research Reports
iShares Core S&P 500 ETF (IVV): ETF Research Reports
To read this article on Zacks.com click here.
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.