Is SPDR Russell 1000 Low Volatility Focus ETF (ONEV) a Strong ETF Right Now?

·4-min read

The SPDR Russell 1000 Low Volatility Focus ETF (ONEV) 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 Blend 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.

Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.

But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.

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.

This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.

Fund Sponsor & Index

The fund is sponsored by State Street Global Advisors. It has amassed assets over $540.82 million, making it one of the average sized ETFs in the Style Box - Large Cap Blend. This particular fund seeks to match the performance of the Russell 1000 Low Volatility Focused Factor Index before fees and expenses.

The Russell 1000 Low Volatility 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 low volatility 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.

Operating expenses on an annual basis are 0.20% for this ETF, which makes it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 1.56%.

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.

For ONEV, it has heaviest allocation in the Industrials sector --about 19.50% of the portfolio --while Information Technology and Financials round out the top three.

Looking at individual holdings, Hp Inc. (HPQ) accounts for about 1.71% of total assets, followed by Cognizant Technology Solutions Corporation Class A (CTSH) and Southwest Airlines Co. (LUV).

The top 10 holdings account for about 8.63% of total assets under management.

Performance and Risk

Year-to-date, the SPDR Russell 1000 Low Volatility Focus ETF has added roughly 19.53% so far, and it's up approximately 59.65% over the last 12 months (as of 05/07/2021). ONEV has traded between $65.21 and $105.27 in this past 52-week period.

ONEV has a beta of 1.02 and standard deviation of 23.29% for the trailing three-year period. With about 456 holdings, it effectively diversifies company-specific risk.

Alternatives

SPDR Russell 1000 Low Volatility 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 $280.24 billion in assets, SPDR S&P 500 ETF has $371.52 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.

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-R1000 LVF (ONEV): ETF Research Reports
 
HP Inc. (HPQ) : Free Stock Analysis Report
 
Southwest Airlines Co. (LUV) : Free Stock Analysis Report
 
Cognizant Technology Solutions Corporation (CTSH) : Free Stock Analysis Report
 
SPDR-SP 500 TR (SPY): ETF Research Reports
 
ISHARS-SP500 (IVV): ETF Research Reports
 
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