As near-term volatility is expected to increase, the ALPS O’Shares U.S. Quality Dividend ETF (OUSA) remains a strong offering in the current environment.
With rising interest rates and hints of recessionary conditions in the global economy, OUSA’s quality methodology that focuses on high return-on-assets and low leverage with low volatility and high dividend yields is extremely pertinent for today’s risks in the market, according to ALPS.
The fund’s overweight to defensive sectors and avoidance of more cyclical sectors that tend to carry high debt loads, including energy, materials, and real estate, have helped it achieve nearly 40 basis points of excess yield (trailing-12-month) relative to the S&P 500 as of August, according to ALPS.
The fund’s excess yield generation positions it as a good candidate to pair with any core equity allocation to possibly lower volatility and increase portfolio yields. The fund charges a 48 basis point expense ratio and brings a factor-based, high dividend yield approach to the large-cap U.S. equities.
OUSA tracks the O’Shares U.S. Quality Dividend Index, whose constituents are selected from the S-Network US Equity Large-Cap 500 Index, which is a compilation of the 500 largest stocks of publicly listed companies within the U.S., according to VettaFi. All stocks included in the S-Network US Equity Large-Cap 500 Index are screened for free-float and average daily trading volume.
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vettafi.com is owned by VettaFi, which also owns the S-Network US Equity Large-Cap 500 Index. VettaFi is not the sponsor of OUSA, but VettaFi’s affiliate receives an index licensing fee from the ETF sponsor.