O'Leary Dividend ETF: Not Dead In Your Portfolio

"Shark Tank" star Kevin O'Leary has told an entrepreneur or two that have appeared on the reality television show, "You're dead to me" when those business owners have presented dreadful ideas or rebuffed credible O'Leary offers.

That brings us to O'Leary's first ETF: O'Shares FTSE US Quality Dividend ETF OUSA. The ETF, which debuted in mid-July, represented the first move into the booming ETF space by Kevin O’Leary. O'Shares was formed by CEO Connor O'Brien and Chairman O'Leary, who together also co-founded O'Leary Funds.

OUSA is barely six months old, meaning its track record is not extensive. However, the new ETF is off to a solid start with $31.3 million in assets under management. That is not a jaw-dropping number by any stretch, but OUSA came to market during a time in which income investors have been fretting about the effects of Federal Reserve interest rate hikes on dividend stocks. Those fears have been reflected in outflows from some marquee dividend ETFs.

OUSA follows the the FTSE US Qual/Vol/Yield Factor Index, an expansion of FTSE Russell's FTSE Global Factor Index Series. That benchmark not only emphasizes dividends, but the widely followed low volatility and quality factors as well.

"The high quality and low volatility requirements are designed to reduce exposure to high dividend equities that have experienced large price declines, as may occur with some dividend investing strategies," according to O'Shares.

Again, six months is not a deep data set, but over that period OUSA is up 1.4 percent. That is better than the Vanguard Dividend Appreciation ETF VIG and the Vanguard High Dividend Yield ETF VYM, two of the largest U.S. dividend ETFs, both of which have traded lower since OUSA debuted. VIG and VYM both cost a lot less than the 0.48 percent per year charged by OUSA, but if the O'Shares continues its outperformance of those rival dividend ETFs, fees should become less important.

Although OUSA is a dividend ETF, its vulnerability to rising interest rates is slight because rate-sensitive telecom and utilities stocks combined for just 15 percent of the ETF's weight at the end of the third quarter, according to issuer data.

The ETF's largest sectors weights are 18 percent to consumer goods, 15 percent to healthcare and 14 percent to industrials. More than half of OUSA's top 10 holdings are dividend aristocrats and seven are members of the Dow Jones Industrial Average, including Exxon Mobil Corporation XOM, Microsoft Corporation MSFT and Verizon Communications Inc. VZ.