What sets small-caps strategies apart from one another? While the impact of rate cuts may not yet be fully understood, small-caps could be poised to disproportionately benefit. Within that broad category, however, not all strategies are created equal.
Indeed, not only can a small-cap ETF’s approach, but also its data speak to its merits. The ALPS O’Shares US Small-Cap Quality Dividend ETF (OUSM ) is combining a notable tech chart buy signal with an approach that could set it apart in its category.
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According to YCharts, the small-cap ETF is sending a buy signal that could indicate some healthy momentum. Its price of $45.03 stands above both its 50- and 200-day simple moving averages (SMAs) of $43.37 and $41.29, respectively. With its 50- and 200-day SMAs both heading in a positive direction, the fund may be displaying some healthy momentum. In terms of performance, the strategy has returned 14.1% over one year, per SS&C ALPS Advisors data, beating its benchmark’s 9.8% return.
A Small-Cap ETF to End the Year
Of course, past performance and past momentum don’t guarantee future results. Though the small-cap ETF may benefit from rate cuts boosting its outlook, it’s the fund’s strategy that can help it differentiate itself. OUSM charges a 48 basis point fee to track the O’Shares US Small-Cap Quality Dividend Index. The small-cap ETF weights its small-cap stock index for quality, low volatility, and high dividend yield.
That quality and dividend weighting provides exposure to firms better poised to take advantage of cheaper borrowing. OUSM applies a 2% cap on any single firm and a 22% cap on each sector. Together, the small-cap ETF’s buy signal, quality focus, and potential to benefit from cuts could help it boost portfolios as the year nears an end.
VettaFi LLC (“VettaFi”) is the index provider for OUSM, for which it receives an index licensing fee. However, OUSM is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of OUSM.
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