Investors have a lot on their plates now as ever, but one thing not to worry about may be performance. There are all kinds of fixed income offerings out there offering better yields than seen in years by fixed income veterans. Meanwhile, despite the “will they/won’t they” drama surrounding the Fed, equities have proved their own durability. So which ETFs stand out? Long-term ETF performance can provide helpful clues about where to look.
Long-term ETF performance means more than just five-year or three-year returns — it also means durable performance even through this year. With such a sea change in environment with the Fed’s rate hikes and a pandemic, an ETF performing well despite those challenges merits a look. One strategy fitting that description may be the ALPS O’Shares U.S. Small-Cap Quality Dividend ETF (OUSM).
OUSM has outperformed its ETF Database Category Average and Factset Segment Average over five years and YTD. OUSM has returned a potent 20.3% over the last year, as well, all for a 48 basis point fee. The strategy launched seven years ago and tracks an index of U.S. small-cap stocks weighted based on quality, low volatility, high dividend yield, and dividend quality.
Tracking the S-Network U.S. Equity Mid/Small-Cap 2500 Index, OUSM ends up holding about 200 names with a 22% cap on each sector. Its combined focus on dividends and quality, too, may be helping, leading it to firms that may be healthier. OUSM currently offers a 1.9% annual dividend yield according to VettaFi. It’s added $65 million over the last three months in net inflows, too.
Taken together, its approach has helped it outperform even the SPDR S&P 500 ETF Trust (SPY) over at least one time frame. OUSM has outperformed SPY over the last three years, 51.9% to 48.2%. For investors looking for a strategy that’s got some proven durability and outperformance, OUSM may be one place to look.
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