Kevin O'Leary may be best known for his role on TV's Shark Tank, but he is increasingly known for his O'Shares series of exchange-traded-funds. Indeed, this past Monday morning, "Mr. Wonderful" rang the opening bell on the New York Stock Exchange. Here are MoneyShow.com advisor reviews of three of his ETFs.
Richard Croft, Internet Wealth Builder
I suggest looking at a new ETF, the O'Shares FTSE Russell Small Cap Quality Dividend ETF (OUSM) , which was recently launched by Shark Tank's Kevin O'Leary.
This fund holds a basket of 200+ profitable companies in the Russell 2000 index. The Russell is an index of 2,000 smaller-cap companies with businesses primarily domiciled in the U.S.
Because O'Shares FTSE Russell Small Cap Quality Dividend ETF only holds profitable, dividend-paying companies, they immediately benefit from having their effective tax rate reduced from 37% to 21%.
That should provide these businesses with a significant tailwind. And because it is a basket of companies, you gain diversification through the ETF, eliminating much of the risks unique to individual companies.
The exchange-traded fund was launched at the end of 2016, so we have a very limited history to work with. But, so far, results have been quite good with a one-year return of 8.9% as of May 31.
Even though it has only been around for a short time, it has attracted a lot of investor interest, with almost $140 million in assets under management to this point (figures in U.S. currency). The expense ratio is 0.48%.
The fund makes monthly distributions, which vary but usually run in the range of $0.06 per unit. In terms of sector distribution, industrials make up about 24% of the portfolio with financials at 18% and consumer discretionary 16%.
We rate the fund a Buy. O'Shares FTSE Russell Small Cap Quality Dividend ETF is well positioned to benefit from the Trump tailwinds while having limited exposure to the headwinds his trade policies are creating.
Jim Woods, Successful Investing
O'Shares Global Internet Giants ETF (OGIG) is the newest addition to O'Shares' growing list of ETFs that are focused on long-term wealth management. O'Shares Chairman Kevin O'Leary shared an example of the rule-based active management at work at O'Shares when the Trump tax cuts took place.
To tap the opportunity, O'Shares management took advantage by rebalancing holdings towards a heavier allocation in strongly profitable small-cap companies that had the majority of their revenues in the United States, as opposed to overseas, since these were the companies that stood to gain the most.
With the explosion of advancements in e-commerce and internet technology, O'Shares rolled out O'Shares Global Internet Giants on June 5, 2018, and it could hardly have come at a more appealing time. The ETF's focus is on internet-related companies that exhibit certain growth and quality characteristics.
More specifically, the fund measures quality using a monthly "cash burn rate," or how much investor capital is spent per month. It also measures growth primarily by revenue growth rate.
O'Shares Global Internet screens the 1,000 largest U.S.-listed companies, the 500 largest European companies, the 500 largest Pacific Basin companies and the 500 largest emerging market companies for stocks that best match the aforementioned quality and growth characteristics.
As part of its investment strategy, O'Shares Global Internet Giants ETF believes in the potential of the Chinese internet companies. In a recently released report, O'Shares revealed that e-commerce sales in China hit $1.1 trillion in 2017, which represents more than 21% of the $5.6 trillion in total retail sales. Furthermore, in the last three years, e-commerce in China has grown over 145%.
After its inception, the fund's share prices soon hit a high of $26 before retreating. Keep in mind that O'Shares Global Internet Giants ETF only has been in existence for a month, so looking solely at the numbers can be misleading, especially since technology and e-commerce companies have come under pressure lately due to the possibility of a trade war. The fund has an expense ratio of 0.48%.
From a sector perspective, O'Shares Global Internet Giants ETF is 74% invested in information technology and 25% in consumer discretionary. As far as country exposure goes, some of the biggest are the United States, 55%; China, 31%; and the United Kingdom, 5%.
The current top holdings for the ETF are: Facebook (FB) , 6.41%; Amazon (AMZN) , 6.24%; Alphabet (GOOG) , 6.18%; Tencent Holdings (TCEHY) , 5.71%; and Alibaba Group Holdings (BABA) , 5.65%.
For investors who are looking to hold a stake in the growing internet technology and e-commerce sectors, consider buying shares in O'Shares Global Internet Giants ETF.
O'Shares FTSE U.S. Quality Dividend ETF (OUSA) , is designed to track the performance of an index that seeks to track publicly listed large-capitalization, dividend-paying issuers in the United States.
Interestingly, O'Shares FTSE U.S. Quality Dividend was the first exchange-traded fund that O'Shares started in July 2015. It was designed with the goal of holding quality, high-dividend companies with low volatility.
As a means of diversification and a way to limit risk, O'Shares FTSE U.S. Quality Dividend caps investment in any one holding at 5%. The fund is rebalanced on a quarterly basis to ensure that weighting limit and to account for any changes in the fundamentals of its holdings.
The exchange-traded fund does not trade in huge volumes, but it has a relatively low spread that caters to small/individual investors and excellent block liquidity that makes it easy to enter and exit for large investors.
The fund makes good on its low-volatility promise, as evident from the fact that in 2015-2017, the exchange-traded fund's maximum drawdown was 450 basis points less than that of the S&P 500.
The ETF has returned 32% since its inception in July 2015. Year to date, however, O'Shares FTSE U.S. Quality Dividend has underperformed the market to slip 2.32% through July 9. The fund also carries an expense ratio of 0.48%, which is higher than some of its peers' expense ratios. However, O'Shares FTSE U.S. Quality Dividend does pay a solid monthly distribution that translates into annual distribution yield of 2.60%.
This is not a typical high-yield ETF. It is not as heavily exposed to utilities and other rate-sensitive sectors. Top holdings for the ETF are: Exxon Mobil (XOM) , 4.77%; Johnson & Johnson (JNJ) , 4.76%; Intel (INTC) , 4.28%; Home Depot (HD) , 3.47%; and AT&T (T) , 3.28%.
O'Shares FTSE U.S. Quality Dividend ETF holdings are diversified across 10 sectors, with the largest concentrations of assets in industrials, 16%; in consumer goods, 14%; in consumer services, 14%; in technology, 13%; and in health care, 13%. For investors looking for quality dividend companies with low-volatility, consider doing more research on O'Shares FTSE U.S. Quality Dividend ETF.
