A smart beta exchange traded fund, the ALPS OShares U.S. Quality Dividend ETF (OUSA) debuted on 07/14/2015, and offers broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking 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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is sponsored by Alps. It has amassed assets over $719.88 million, making it one of the average sized ETFs in the Style Box - Large Cap Value. Before fees and expenses, this particular fund 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are 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's 12-month trailing dividend yield comes in at 1.43%.
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.
For OUSA, it has heaviest allocation in the Financials sector --about 28.9% of the portfolio --while Information Technology and Healthcare round out the top three.
Taking into account individual holdings, Johnson & Johnson (JNJ) accounts for about 5.75% of the fund's total assets, followed by Alphabet Inc. (GOOGL) and Apple Inc. (AAPL).
The top 10 holdings account for about 42.42% of total assets under management.
Performance and Risk
The ETF has added roughly 0.47% so far this year and is up roughly 10.31% in the last one year (as of 06/24/2026). In the past 52-week period, it has traded between $53.14 and $59.77
The fund has a beta of 0.75 and standard deviation of 11.32% for the trailing three-year period, which makes OUSA a medium risk choice in this particular space. With about 101 holdings, it effectively diversifies company-specific risk .
Alternatives
ALPS OShares U.S. Quality Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
Schwab U.S. Dividend Equity ETF (SCHD) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value Index Fund ETF Shares (VTV) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $100.23 billion in assets, Vanguard Value Index Fund ETF Shares has $183.66 billion. SCHD has an expense ratio of 0.06% and VTV changes 0.03%.
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
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ALPS OShares U.S. Quality Dividend ETF (OUSA): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).