U.S. Investing

Let’s Give Our Profits Some Momentum!

Last week, I introduced the SPDR Russell 1000 Low Volatility Focus ETF (NYSE: ONEV), a multi-factor smart beta fund that focused largely on low volatility stocks.

Today, I want to introduce you to one of its cousins, another multi-factor smart beta fund with a different core value set: one focused on momentum. Founded in 2015 by State Street Global Advisors, the SPDR Russell 1000 Momentum Focus ETF (ONEO) tracks the Russell 1000 Momentum Focused Factor Index, whose stocks are selected and weighted by four factors, and are then scaled by market cap.

Despite its name, ONEO doesn’t focus solely on high-momentum stocks. Instead, the fund stands alongside ONEV and ONEY as part of a suite of exchange-traded funds (ETFs) that score the members of the Russell 1000 index on three “core” factors — value, quality and small size — and one “focus” factor, which in ONEO’s case, is momentum. These factor scores are then scaled by market cap to determine their weighting and holdings. Russell 1000 equities with weights below a certain threshold get dropped from the index.

The result is a portfolio that loosely resembles the broad market, but with emphasis on the four factors, including momentum. ONEO’s focus on the Russell 1000 means it holds a significant amount of mid-cap investments. That focus is amplified by the fund’s small size factor tilt.

At present, ONEO has $152.34 million assets under management, and has an expense ratio of 0.20%. Its current top holdings include the Marathon Petroleum Corporation (NYSE: MPC), Cardinal Health, Inc. (NYSE: CAH), the ON Semiconductor Corporation (NASDAQ: ON), the McKesson Corporation (NYSE: MCK) and Reliance Steel & Aluminum Co. (NYSE: RS).

Courtesy of www.stockcharts.com

As of Sept. 19, the fund is up 0.02% in the past month, 0.27% in the past three months and up 5.91% year to date.

While this fund may be focused on high momentum, it is better for investors to slow down and take their time. Remember to always consider your personal financial situation and goals before making any investment. Investors are always encouraged to do their due diligence before adding any stock or exchange-traded fund (ETF) to their portfolios.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You may just see your question answered in a future ETF Talk.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Intelligence Report, Investing Edge, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.