Designed to provide broad exposure to the Small Cap Blend segment of the US equity market, the Invesco Russell 2000 Dynamic Multifactor ETF (OMFS) is a passively managed exchange traded fund launched on 11/08/2017.
The fund is sponsored by Invesco. It has amassed assets over $264.36 million, making it one of the average sized ETFs attempting to match the Small Cap Blend segment of the US equity market.
Why Small Cap Blend
There's a lot of potential to investing in small cap companies, but with market capitalization below $2 billion, that high potential comes with even higher risk.
Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.39%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.84%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector--about 25.50% of the portfolio. Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Modine Manufacturing Co (MOD) accounts for about 0.81% of total assets, followed by Titan Machinery Inc (TITN) and Geo Group Inc/the (GEO).
The top 10 holdings account for about 5.93% of total assets under management.
Performance and Risk
OMFS seeks to match the performance of the RUSSELL 2000 INVESCO DYNAMIC MLTIFCTR ID before fees and expenses. The Russell 2000 Invesco Dynamic Multifactor Index is constructed using a rules-based methodology by selecting equity securities from the Russell 2000 Index, which measures the performance of 2,000 small-capitalization companies in the United States.
The ETF has added about 2.25% so far this year and is down about -8.97% in the last one year (as of 03/22/2023). In the past 52-week period, it has traded between $31.60 and $39.90.
The ETF has a beta of 1.11 and standard deviation of 29.57% for the trailing three-year period. With about 695 holdings, it effectively diversifies company-specific risk.
Invesco Russell 2000 Dynamic Multifactor ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, OMFS is a good option for those seeking exposure to the Style Box - Small Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 2000 ETF (IWM) and the iShares Core S&P Small-Cap ETF (IJR) track a similar index. While iShares Russell 2000 ETF has $51.25 billion in assets, iShares Core S&P Small-Cap ETF has $66.94 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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