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OUSM ETF Rebalances: Highlighting Quality Factor Shifts

BY | ETF Database
9:54 am ET 09/21/26 | 13 VIEWS
The index underpinning the ALPS O’Shares U.S. Small-Cap Quality Dividend ETF (OUSM A) recently completed its annual reconstitution on September 18. Small-cap equities continue to navigate persistent macroeconomic shifts and higher interest rates. In this environment, index rebalances provide insight into where balance-sheet health, profitability, and cash-flow reliability are strengthening.Key Takeaways: The ALPS O’Shares U.S. Small-Cap Quality Dividend ETF (OUSM A) completed its annual reconstitution, making 28 additions and 26 deletions. Rebalance actions signaled a distinct rotation away from consumer staples and toward high-cash-flow healthcare, technology, and industrial names. The index added healthcare leaders Concentra Group Holdings Parent Inc (CON) and Universal Health Services Inc (UHS) at top weightings while trimming leverage-sensitive holdings. Rebalance Rotates Exposure Toward Quality Healthcare & TechOUSM is based on the O’Shares U.S. Small-Cap Quality Dividend Index, which screens the small-cap universe using a disciplined multi-factor model centered on quality, volatility, dividend yield, and dividend quality. The methodology keeps the portfolio firmly grounded in financial stability by excluding businesses burdened with high debt or declining earnings quality. OUSM has a portfolio of 111 holdings following the recent reconstitution. Its index has a sector weight cap of 22% and an individual security weight cap of 2%. This provides diversified access to U.S. small-cap quality dividend payers. The fund focuses on high profitability and low leverage, effectively filtering out cyclical, debt-heavy segments of the market. This unique methodology means its index excludes the energy and real estate sectors and maintains minimal exposure to materials. Among the 28 additions to the portfolio, healthcare providers and technology enablers took center stage. Concentra Group Holdings Parent Inc (CON) and Universal Health Services Inc (UHS) entered as top additions. Industrials and fintech also gained representation through Graco Inc (GGG) and Jack Henry & Associates Inc (JKHY).Pruning Consumer Food Staples & Leveraged HoldingsA clear theme across the 26 deletions was the exit of low-margin or highly leveraged consumer staples and legacy food producers. Names like Conagra Brands Inc (CAG), The Wendy’s Company (WEN), Albertsons Companies Inc (ACI) were removed completely from the index. Additional deletions included legacy industrial and technology components such as ITT Inc (ITT) and TD Synnex Corp (SNX). For advisors seeking small-cap exposure without taking on speculative balance-sheet risk, OUSM’s methodology helps target profitable, stable companies, positioning the portfolio around resilient dividend payers. For more news, information, and analysis, visit the ETF Building Blocks Content Hub. 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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