Designed to provide broad exposure to the Large Cap Value segment of the US equity market, the SPDR Russell 1000 Yield Focus ETF (ONEY) is a passively managed exchange traded fund launched on 12/02/2015.
The fund is sponsored by State Street Global Advisors. It has amassed assets over $761.56 million, 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
Companies that fall in the large cap category tend to 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.
Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their lower than average sales and earnings growth rates. While 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.
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.20%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 3.16%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector--about 19.40% of the portfolio. Energy and Consumer Discretionary round out the top three.
Looking at individual holdings, Pioneer Natural Resources Co (PXD) accounts for about 1.57% of 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
ONEY seeks to match the performance of the Russell 1000 Yield Focused Factor Index before fees and expenses. 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.
The ETF has lost about -0.89% so far this year and it's up approximately 3.28% in the last one year (as of 01/30/2024). In the past 52-week period, it has traded between $86.22 and $102.43.
The ETF has a beta of 1.13 and standard deviation of 17.67% for the trailing three-year period. With about 303 holdings, it effectively diversifies company-specific risk.
SPDR Russell 1000 Yield Focus ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, ONEY is a reasonable option for those seeking exposure to the Style Box - Large Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The Schwab U.S. Dividend Equity ETF (SCHD) and the Vanguard Value ETF (VTV) track a similar index. While Schwab U.S. Dividend Equity ETF has $52.79 billion in assets, Vanguard Value ETF has $107.61 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.04%.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
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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