What is OALC? (Pros, Cons, and Strategies)

Investing in the stock market has always been seen as a prudent strategy for building long-term wealth. One of the many investment vehicles available today is the OALC, or OneAscent Large Cap Core ETF. This ETF has gained attention for its distinctive approach to investing in large-cap companies. In this blog post, we'll explore what OALC is, along with its advantages and disadvantages, and some strategic insights on how to utilize it effectively in your investment portfolio.

What is OALC?

OALC stands for OneAscent Large Cap Core ETF. It is designed to offer investors exposure to large-cap U.S. companies while aligning investments with biblically responsible values.

OALC aims to invest in companies that not only have strong financial performance but also adhere to specific moral and ethical standards. This ETF endeavors to balance financial returns with responsible, ethical investing, often making it a choice for investors who prioritize faith-based or values-driven investment strategies.

Key Features of OALC

• Biblically Responsible Investing (BRI): OALC screens its investments based on BRI principles, ensuring that the companies it invests in adhere to Christian ethical values.
• Focus on Large-cap Companies: OALC targets companies with substantial market capitalizations, typically over $10 billion.
• Actively Managed: Unlike many ETFs that merely track an index, OALC is actively managed, allowing the fund managers to make tactical decisions based on market conditions.

This ETF aims to provide foundational support for investors seeking to build long-term wealth while staying true to their ethical and moral principles.

OALC Composition

OALC includes a variety of well-established, large-cap U.S. companies across several sectors. These firms are not only financially robust but also meet stringent ethical guidelines. The ETF aims for diversification to reduce risk while focusing on companies that demonstrate strong growth potential and ethical practices.

Pros of OALC

Ethical Investing

One of the most significant advantages of OALC is its commitment to ethical investing. For investors looking to ensure their money is supporting values-aligned companies, this ETF provides a vetted selection of stocks that meet biblically responsible investing criteria.

Diversification

By investing in a broad array of large-cap companies across different sectors, OALC provides diversification, which is crucial for risk management. Diversification helps to balance the portfolio and reduce the impact of volatility in any single sector or stock.

Professional Management

OALC is actively managed, which allows the fund managers to make real-time decisions in response to market conditions. This means potential opportunities can be seized, and risks can be mitigated more dynamically compared to passively managed funds.

Cons of OALC

Higher Expense Ratio

Active management often comes with a higher expense ratio compared to passive ETFs. The costs associated with frequent trading, research, and the expertise of fund managers need to be considered. OALC's expense ratio might be higher than some non-managed ETFs, impacting net returns over the long term.

Limited Historical Performance

As a relatively new ETF, OALC does not have the long track record that other more established ETFs might offer. Investors may find it challenging to gauge future performance based solely on the available short-term data.

Sector Limitations

Given the ethical screening process, certain high-performing sectors or companies might be excluded from OALC. This could potentially limit the fund's exposure to profitable investments in industries that do not meet biblically responsible investing criteria.

OALC Investment Strategies

Regardless of the potential drawbacks, OALC can be a compelling choice for values-driven investors. Here are some strategies to maximize your investments with OALC:

Long-term Investment Strategy

OALC is best suited for long-term investors who prioritize ethical considerations along with financial returns. Given its focus on large-cap, stable companies, this ETF is designed for investors who plan to hold it for the long haul, ideally 10 years or more. Over the long term, the ethical foundation combined with professional management aims to provide reasonable returns with lower risk.

Dollar-cost Averaging

Investing a fixed amount of money at regular intervals, regardless of the fund's price, is known as dollar-cost averaging. This strategy can minimize the impact of volatility and provide a disciplined investment approach. By consistently investing in OALC over time, you can potentially smooth out the effects of market fluctuations.

Ethical Portfolio Complement

For those who already have a diversified portfolio, adding OALC can serve as a way to align a portion of their investments with their values without compromising on diversification. This allows for maintaining broad exposure to the market while fulfilling ethical investment criteria.

Conclusion

OALC (OneAscent Large Cap Core ETF) offers a unique combination of ethical investing and financial prudence. Its commitment to biblically responsible investing criteria makes it an ideal choice for investors who prioritize their faith and values in their financial decisions. While it has some limitations, such as a higher expense ratio and limited historical performance, its benefits can outweigh these drawbacks, especially for long-term, values-driven investors.

By utilizing strategies such as long-term investing, dollar-cost averaging, and complementing your existing portfolio with OALC, you can strategically position yourself for ethical and financial growth.