Small-caps offer an intriguing opportunity set at an uncertain time. Rate cuts could benefit smaller firms, but geopolitical and policy challenges remain, as well. For investors who want to get exposure to that category and diversify away from concentration risk, then, what options can appeal? A quality small-cap ETF like OUSM could stand out, having crossed the $1 billion AUM threshold this week, per ETF Database data.
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The O’Shares U.S. Small-Cap Quality Dividend ETF (OUSM) charges a 48 basis point fee for its quality small-caps approach. The fund looks for small-caps weighted for factors like quality, low volatility, high dividend yield, and dividend quality.
Quality Small-Caps in $1 Billion ETF OUSM
That focus on dividends as a measure of quality can help find small companies with healthy internal outlooks. Not only does that include firms poised to weather turbulence ahead, but also those capable of performing for investors.
“Small-cap ETFs are increasingly in favor ahead of the Fed resuming its rate cut efforts,” said VettaFi Head of Research Todd Rosenbluth. “OUSM hitting $1 billion is a great milestone that proves that investors are looking beyond market-cap weighted small-cap ETFs.”
The fund temporarily passed that threshold thanks to more than $100 million in net inflows YTD. Specifically, the strategy picked up $109 million YTD, per ETF Database data. The strategy has performed while rising to that new AUM marker, as well. The quality small-caps ETF has returned 12.76% over the last three years, beating its ETF Database Category and FactSet Segment averages in that time.
Looking ahead, the ETF could provide exposure to that space while eschewing potentially weaker small-cap companies. For those looking at ways to diversify away from concentration risk, then, OUSM can make for a notable option.
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