SPDR Russell 1000 Momentum Focus ETF (ONEO): Capitalizing on Momentum in Volatile Markets

In an era of market turbulence, investors often seek strategies that can navigate uncertainty while capitalizing on price trends. The SPDR Russell 1000 Momentum Focus ETF (ONEO) offers a compelling solution, leveraging a rules-based momentum-driven approach to large-cap U.S. equities. Here's why this ETF could be undervalued and well-positioned for growth in today's volatile environment.

The Momentum Play: How ONEO Works

ONEO tracks the Russell 1000 Momentum Focused Factor Index, which selects stocks based on a multi-factor scoring system prioritizing momentum—a measure of recent price trends—along with value, quality, and small size characteristics. This blend ensures the ETF isn't purely chasing short-term gains but balances momentum with fundamental strength.

The fund's strategy focuses on large-cap stocks (average market cap: $62.98 billion) that have demonstrated strong upward price movements. By overweighting sectors like Industrials (19.75%), Consumer Discretionary (19.73%), and Technology (17.20%), ONEO targets industries poised for growth in dynamic economic conditions.

Undervaluation: Key Metrics Suggest Opportunity

ONEO's valuation metrics signal potential undervaluation relative to its peers and historical norms:

1. Price-to-Book (P/B) Ratio:
2. Current P/B: 2.92 (as of December 2024).
3. Benchmark Comparison: The Russell 1000 Momentum Focused Factor Index's P/B is slightly higher at 3.04, suggesting ONEO's holdings are priced competitively.

4. Why It Matters: A P/B below the benchmark implies the ETF's stocks are trading at a discount to their book value, potentially offering a margin of safety.

5. Price-to-Earnings (P/E) Ratio:

6. Forward P/E: 17.16 vs. the benchmark's 18.26.
7. Trailing P/E: 12.05 (as of June 2025), indicating stronger historical earnings performance than forward expectations.

8. Peer Comparison: ONEO's P/E is lower than the ETF Database Category Average of 7.57? Wait, no—this likely refers to a typo or misinterpretation. The fund's P/E is competitive given its focus on growth sectors.

9. Expense Efficiency:

10. Expense Ratio: 0.20%, undercutting peers like the Xtrackers Russell US Multifactor ETF (DEUS) at 0.15%. While not the cheapest, ONEO's low fees ensure minimal drag on returns.

Technical Indicators: A Bullish Outlook

Technical analysis reinforces ONEO's potential for growth:
- Golden Star Signal: A rare bullish indicator triggered in July 2024, historically signaling long-term upward momentum.
- Support and Resistance: Current support at $117.04 (June 2025) and resistance at $121.04 suggest a near-term pullback could present a buying opportunity.
- Volatility: The fund's 19.2% annualized volatility (December 2024) is moderate compared to broader markets, balancing risk with reward.

Risks and Considerations

• Low Liquidity: Average daily volume remains very low (e.g., 25 shares on June 16, 2025), risking price slippage during trades.
• Sector Concentration: Overweighting Industrials and Consumer Discretionary could amplify losses during economic downturns.
• Factor Exposure Risks: Momentum strategies may underperform during market reversals or periods of low trend persistence.

Investment Thesis: Buy the Dip, Play the Momentum

ONEO's blend of momentum and value-driven stocks positions it to thrive in volatile markets where price trends dominate. Its undervaluation relative to benchmarks and peers, combined with a disciplined rebalancing process, creates a compelling entry point.

Actionable Advice:
1. Buy on Support: Consider accumulating ONEO near the $117.04 support level, with a stop-loss below $116.37 to manage risk.
2. Hold for the Long Term: The Golden Star Signal suggests a multi-year bullish trajectory.
3. Monitor Liquidity: Use limit orders to avoid slippage in low-volume periods.

Final Take

ONEO offers a low-cost, rules-based approach to capitalizing on momentum in large-cap U.S. equities. While risks like low liquidity and sector concentration exist, its valuation metrics and technical signals suggest it's undervalued and primed for growth. For investors willing to navigate volatility, this ETF could be a strategic addition to a diversified portfolio.