SPDR Russell 1000 Yield Focus ETF combats key risks that come with investing in high-yield stocks. Its low fee and pointed exposure to the value, quality, and small-size factors should give it a performance edge over the Russell Mid Cap Value, driving a Morningstar Medalist Rating of Silver.  
This index strategy starts with the Russell 1000 Index portfolio and adjusts stocks’ weights to favor those with high dividend yields, attractive valuations, strong quality traits, and smaller market capitalizations. Bending toward the value, quality, and small-size factors should aid performance because they have historically been tied to market-beating returns. The blend also creates balance, as quality and value tend to thrive at different times. Yield is the focus, though; it is weighted twice as heavily as the other factors. This can invite risk. High-yielding stocks tend to pay out a large share of their earnings as dividends. Others may generate a high yield from their declining stock prices, which can reflect deteriorating fundamentals.
Incorporating the quality factor helps muffle the risk of getting saddled with these companies. Some risky dividend payers slip through the cracks, but it protects the fund from many of the weakest. Starting with stocks’ market cap weight helps reduce risk as well. So, while the fund has been a bit more volatile than the category index, it has safeguards that promote stability.
Solid diversification serves as a valuable second line of defense. While the fund’s value tilt is more pronounced than the Russell Mid Cap Value Index, the category benchmark, it avoids concentration at the holding and sector levels. Its top 10 holdings have accounted for 11% to 20% of the portfolio over the past five years, and no sector weight exceeded financials’ 17% share as of May 2023.
This fund looks different than the category index, so their performances can diverge. So far, that has been for the better. The fund outpaced the Russell Mid Cap Value Index by 2.95 percentage points annualized from its December 2015 inception through May 2023, ranking among the top 3% of mid-cap value funds and rewarding investors willing to tolerate the bumpier ride it offered.

Analyst Rating

A smart spin on high-yield investing.

Analyst

Ryan Jackson

Pioneer Natural Resources

Diamondback Energy

Devon Energy

Valero Energy

Dow Inc

PACCAR

Cardinal Health

Phillips 66

LyondellBasell Industries

T. Rowe Price Group

Anchoring stocks' weight to their market capitalization and minding profitability keeps this fund out of trouble. It should excel when value stocks rally but is diversified enough to stay afloat when they don't. It earns an Above Average Process Pillar rating.

Above Average

Process

State Street Global Advisors' Global Equity Beta Solutions team manages this fund. The team's global footprint, trading, and risk management processes enable low transaction costs and tight index tracking, supporting an Above Average People Pillar rating.
Karl Schneider and John Law are the named managers on this fund. Schneider is a managing director of SSGA and the deputy head of the Global Equity Beta Solutions team for the Americas region. He started with SSGA in 1997 and has been on this fund since December 2015. Law Joined the firm in 2016 and has helped oversee this strategy since October 2017. 
Mike Feehily, the longtime co-head of Global Equity Beta Solutions and manager of this strategy, left the asset management industry in March 2023. His departure does not erode confidence in this team’s ability to effectively track the index. Schneider and Law have the experience to absorb the responsibility, and the deep trove of portfolio managers and analysts they oversee remains intact. Portfolio managers do not personally invest in this strategy, but part of their variable compensation is linked to index tracking, aligning their interests and investors’.

People

State Street Global Advisors is under new leadership but continues to move along the positive trajectory established by former leaders. SSGA maintains its Above Average Parent Pillar rating.
Cyrus Taraporevala, who oversaw much of SSGA’s recent transformation, retired from the CEO position in December 2022 and passed the baton to his successor, Yie-Hsin Hung. She inherited a business that’s become more disciplined with its fund lineup. Fees have come down, while product development remains focused on fixed-income and sustainability funds, and many of SSGA’s launches have echoed that intention.
The seeds that SSGA planted over the past several years have been bearing fruit. It built out a low-cost series of portfolio building-block ETFs in the U.S. bearing the “SPDR Portfolio” branding. SSGA launched these later than its industry rivals, so they aren’t as large. But they’re competitive, with solid management and low fees, which helped them consistently take in new money over the past several years.
SSGA continued to overhaul its ETF business in Europe with most of its recent fixed-income and sustainability fund launches. Many of these funds track indexes and charge relatively low fees. With operations in the U.S. and Europe standing on a firm foundation, SSGA will put more focus on its Asia-Pacific business—the smallest regional segment of its business.

Parent

SPDR Russell 1000 Yield Focus ETF

ONEY tracks an index of large-cap stocks from the Russell 1000 Index, selected and weighted by four factors that are scaled by market cap.

Launched on 12/02/2015, the SPDR Russell 1000 Yield Focus ETF (ONEY) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Value segment of the US equity market.

Should SPDR Russell 1000 Yield Focus ETF (ONEY) Be on Your Investing Radar?

The SPDR Russell 1000 Yield Focus ETF (ONEY) was launched on 12/02/2015, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Large Cap Value category of the market.

Is SPDR Russell 1000 Yield Focus ETF (ONEY) a Strong ETF Right Now?

SPDR Russell 1000 Yield Focus ETF is a passive ETF that focuses on large-cap U.S. equities with strong dividend yields. ONEY has a competitive expense ratio of 0.20% and a significant AUM of over $750 million. The fund's holdings are diversified and include companies such as Pioneer Natural Resources, Devon Energy Corp, and Diamondback Energy Inc.

ONEY: A Value Play Focused On Yield

ONEY is an index-based fund focusing on U.S. dividend names with solid quality and meaningful yields. ONEY has underperformed the S&P 500 since the previous note, with exposure to financials being one of the likely reasons. Though not a permabear, I would advocate against reducing exposure to the value factor and cranking up bets on growth at this juncture.

ONEY Still Has A Factor Mix I Like

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ONEY: An Option To Invest In Large-Cap Stocks With High Quality And Yield.

ONEY: An Option To Invest In Large-Cap Stocks With High Quality And Yield

ONEY favors mostly large-cap U.S. equities with robust quality and higher dividend yields. ONEY has outperformed the S&P 500 since my previous article.

ONEY Is A Solid ETF For Large-Cap Quality And Value Exposure

ONEY is a fairly inexpensive investment vehicle worth considering to gain exposure to a basket of mostly large cap, high quality, dividend-paying U.S. equities. Debuted in 2015, ONEY follows a smart-beta investment strategy that is to track the Russell 1000 Yield Focused Factor Index.

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