Morningstar - Q3 2023 - 54

Strategies
A Smart Spin on High-Yield Stock Investing
SPDR Russell 1000 Yield Focus ETF limits key risks in
its universe.
Ryan Jackson
BEST IDEAS: PASSIVE
This article is adapted from the ETF's Morningstar Global Fund Report dated
July 3, 2023.
SPDR Russell 1000 Yield Focus ETF ONEY 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 Midcap Value Index, 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. While the fund has been a bit
more volatile than the category index, these safeguards promote stability.
Solid diversification serves as a valuable second line of defense. While the
fund's value tilt is more pronounced than the Russell Midcap 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.
The fund outpaced the Russell Midcap 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. K
Ryan Jackson is a manager research analyst at Morningstar Research Services LLC.
54
Morningstar Q3 2023
SPDR Russell 1000 Yield Focus ETF ONEY
Stats 06/30/2023
Morningstar Medalist Rating
„
Total Assets
$752.3 Million
Process
Above Average
Growth of 10K 06/30/2023
$20K
SPDR Russell 1000
Yield Focus ETF
17.75
15
10
07/2020
07/2021
Morningstar Style Box 06/30/2023
Growth
Value
Blend
07/2022
Morningstar Ratings 06/30/2023
Snapshot as
of most recent
portfolio.
Period
3-Yr
5-Yr
Mstar
Return
Mstar
Risk
Mstar
Rating
Above Avg Above Avg QQQQ
High
10-Yr -
Overall Rating
Top 5 Sectors 06/30/2023
■ Fund ❙ Category Average
y Financial Svcs
t Consumer Cyc
o Energy
u Real Estate
f Utilities
0%
16.08
5.83
6.23
6.67
5
11.86
11.64
11.56
10.08
10
15
20
14.80
17.00
-
-
QQQQ
Above Avg QQQQQ
Morningstar
US Mid Value
16.01
Morningstar Category
Mid-Cap Value
5-Yr Annlzd Return
9.31%
Morningstar Pillars 06/30/2023
People
Above Average
Parent
Above Average
Expense Ratio
0.20%
5-Yr % Rank in Cat
9
Small
Mid
Large
https://www.morningstar.com/etfs/arcx/oney/quote https://www.morningstar.com/authors/2385/ryan-jackson
Morningstar - Q3 2023

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