A Steady Dividend ETF From O’Shares
Todd Shriber, ETF Professor , Benzinga Staff Writer
November 26, 2018 3:14pm
Weakness in the FAANG stocks and other growth and momentum names has some market observers opining about a rotation to value stocks, a group that has achieved laggard status in recent years.
Some evidence suggests that a rotation to value may be warranted. This month, the S&P 500 Value Index is up nearly 1 percent while the S&P 500 is lower by nearly the same amount.
Investors focusing on a possible resurgence by value stocks may be missing out on opportunities with quality and dividend stocks such as those featured in the O’Shares FTSE U.S. Quality Dividend ETF OUSA.
OUSA, which is up 1.55 percent this month, tracks the FTSE USA Qual/Vol/Yield 5% Capped Factor Index.
OUSA’s underlying benchmark “is designed to measure the performance of publicly-listed large-capitalization and mid-capitalization dividend-paying issuers in the United States that meet certain market capitalization, liquidity, high quality, low volatility and dividend yield thresholds,” according to O’Shares.
Why It’s Important
Some single factor strategies like low volatility lack the ability to capture all of the upside in bull markets, but offer downside protection when stocks swoon. OUSA captured most of the market’s upside while harnessing just 64 percent of the downside, while the S&P 500 Value Index had a downside capture of nearly 100 percent, according to O’Shares data.
OUSA has relatively light exposure to some of the sectors that dominate value strategies. For example, the fund devotes about 18 percent of its combined weight to the troubled energy and financial services sectors. The ETF allocates about a quarter of its weight to the consumer discretionary and technology sectors, groups that are hallmarks of growth strategies.
Still, OUSA offers defensive positioning, as highlighted by a combined weight of over 31 percent to the consumer staples and health care sectors.
Over the past year, OUSA has outperformed the S&P 500 Value Index with lower volatility. OUSA’s trailing 12-month dividend yield of 3.08 percent is also higher than that of the S&P 500 Value Index.
For current standard performance of the Fund, please visit OUSA Fund Page.
OUSA Fund Page | OUSA Holdings
|Name (as of 02/15/2019)||Ticker||Sector||Fund Weight|
|Johnson & Johnson||JNJ||Health Care||4.89%|
|Exxon Mobil Corporation||XOM||Energy||4.88%|
|Procter & Gamble||PG||Consumer Goods||4.43%|
|Home Depot||HD||Consumer Services||3.03%|
|Merck & Co||MRK||Health Care||2.33%|
|Philip Morris International||PM||Consumer Goods||2.30%|
|International Bus Machns.||IBM||Technology||1.96%|
|Simon Property Group||SPG||Financials||1.75%|
|McDonalds Corp||MCD||Consumer Services||1.53%|
|Altria Group||MO||Consumer Goods||1.49%|
|Marsh & Mclennan||MMC||Financials||1.48%|
|Disney (Walt) Company||DIS||Consumer Services||1.14%|
|Amgen Corp||AMGN||Health Care||1.11%|
|Lockheed Martin Corp||LMT||Industrials||1.08%|
|Lilly (Eli) & Co||LLY||Health Care||1.07%|
|Accenture Cl A||ACN||Industrials||1.01%|
|AbbVie Inc||ABBV||Health Care||0.93%|
|Union Pacific Corp||UNP||Industrials||0.92%|
|Bristol Myers Squibb||BMY||Health Care||0.91%|
|Medtronic plc||MDT||Health Care||0.87%|
|Honeywell International Incorporation||HON||Industrials||0.86%|
|Price (T. Rowe) Group||TROW||Financials||0.78%|
|Automatic Data Process||ADP||Industrials||0.73%|
|NextEra Energy Inc||NEE||Utilities||0.72%|
|Duke Energy Corp||DUK||Utilities||0.66%|
|Walgreens Boots Alliance||WBA||Consumer Services||0.64%|
|CVS Health Corporation||CVS||Consumer Services||0.58%|
|Lowes Cos Inc||LOW||Consumer Services||0.57%|
|General Dynamics Corp||GD||Industrials||0.56%|
|TJX Companies||TJX||Consumer Services||0.55%|
|Illinois Tool Wks||ITW||Industrials||0.50%|
|Waste Mgmt Inc||WM||Industrials||0.44%|
|Linde plc||LIN||Basic Materials||0.42%|
|Cons Edison Holding||ED||Utilities||0.39%|
|American Elec Power Com||AEP||Utilities||0.39%|
|Target Corp||TGT||Consumer Services||0.33%|
|Extra Space Storage||EXR||Financials||0.30%|
|LyondellBasell Industries Cl A||LYB||Basic Materials||0.29%|
|Sysco Corp||SYY||Consumer Services||0.28%|
|Public Svc Enterprise Group||PEG||Utilities||0.28%|
|Air Products And Chemcom||APD||Basic Materials||0.27%|
|Eaton Corp PLC||ETN||Industrials||0.27%|
|Carnival Corp A||CCL||Consumer Services||0.25%|
|WEC Energy Group||WEC||Utilities||0.23%|
|VF Corp||VFC||Consumer Goods||0.23%|
|Arthur J Gallagher||AJG||Financials||0.22%|
|Maxim Integrated Prod.||MXIM||Technology||0.22%|
|Hershey Company||HSY||Consumer Goods||0.22%|
|Host Hotels & Resorts||HST||Financials||0.22%|
|Yum Brands||YUM||Consumer Services||0.21%|
|Darden Restaurants||DRI||Consumer Services||0.19%|
|Omnicom Group||OMC||Consumer Services||0.17%|
|Federal Realty Invs||FRT||Financials||0.14%|
|American Water Works Company||AWK||Utilities||0.13%|
|CMS Energy Corp||CMS||Utilities||0.13%|
|Cardinal Health||CAH||Health Care||0.12%|
|Liberty Property Trust||LPT||Financials||0.12%|
|Hormel Foods||HRL||Consumer Goods||0.12%|
|Pinnacle West Capital Corp||PNW||Utilities||0.11%|
|Garmin Ltd||GRMN||Consumer Goods||0.10%|
|Interpublic Group Cos||IPG||Consumer Services||0.09%|
|J M Smucker||SJM||Consumer Goods||0.09%|
|Expeditors Intl Washington||EXPD||Industrials||0.09%|
|Campbell Soup||CPB||Consumer Goods||0.08%|
|Coca-Cola European Partners||Consumer Goods||0.08%|
|Intl Flavours & Fragrances||IFF||Basic Materials||0.08%|
|ConAgra Brands Inc||CAG||Consumer Goods||0.07%|
|Leggett & Platt||LEG||Consumer Goods||0.06%|
|Molson Coors CL B||TAP||Consumer Goods||0.06%|
|Packaging Corp of America||PKG||Industrials||0.06%|
|Gentex Corp||GNTX||Consumer Goods||0.04%|
|Block (H & R) NPV||HRB||Consumer Services||0.03%|
|Southern Copper Corp.||Basic Materials||0.01%|
|Garrett Motion||GTX||Consumer Goods||0.01%|
Before you invest in O’Shares ETF Investments Funds, please refer to the prospectus for important information about the investment objectives, risks, charges and expenses. To obtain a prospectus containing this and other important information, please visit www.oshares.com to view or download a prospectus online. Read the prospectus carefully before you invest. There are risks involved with investing including the possible loss of principal.
Concentration in a particular industry or sector will subject the Funds to loss due to adverse occurrences that may affect that industry or sector. The Funds may use derivatives which may involve risks different from, or greater than, those associated with more traditional investments. The Funds’ emphasis on dividend-paying stocks involves the risk that such stocks may fall out of favor with investors and underperform the market. Also, a company may reduce or eliminate its dividend after the Funds’ purchase of such a company's securities. Returns on investments in foreign securities could be more volatile than, or trail the returns on, investments in U.S. securities. Exposures to foreign securities entail special risks, including political, diplomatic, economic, foreign market and trading risks. In addition, the Funds’ investments in securities denominated in other currencies could decline due to changes in local currency relative to the value of the U.S. dollar, which may affect the Funds’ returns. See the prospectus for specific risks regarding the Funds.
The securities of small capitalization companies are often more volatile and less liquid than the stocks of larger companies and may be more affected than other types of securities during market downturns. Compared to larger companies, small capitalization companies may have a shorter history of operations, and may have limited product lines, markets or financial resources.
Companies involved with the Internet, technology and e-commerce are exposed to risks associated with rapid advances in technology, obsolescence of current products and services, the finite life of patents and the constant threat of global competition and substitutes.
Past performance does not guarantee future results. Shares are bought and sold at market price (not NAV), are not individually redeemable, and owners of Shares may acquire those Shares from the Funds and tender those shares for redemption to the Funds in Creation Unit aggregations only, consisting of 50,000 Shares. Brokerage commissions will reduce returns. The market price of Shares can be at, below, or above NAV. Brokerage commissions will reduce returns. Market Price returns are based upon the midpoint of the bid/ask spread at 4:00 PM Eastern time (when NAV is normally determined), and do not represent the returns you would receive if you traded Shares at other times.
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