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Is IQ Chaikin U.S. Small Cap ETF (CSML) a Strong ETF Right Now?

The IQ Chaikin U.S. Small Cap ETF (CSML) was launched on 05/16/2017, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Small Cap Blend category of the market.

What Are Smart Beta ETFs?

The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.

Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.

If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.

By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.

Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.

Fund Sponsor & Index

The fund is sponsored by New York Life Investments. It has amassed assets over $228.39 million, making it one of the average sized ETFs in the Style Box - Small Cap Blend. Before fees and expenses, CSML seeks to match the performance of the NASDAQ Chaikin Power US Small Cap Index.

The NASDAQ Chaikin Power US Small Cap Index is a rules-based, quantitative index designed to enhance the NASDAQ US 1500 Index, by selecting stocks with the highest Chaikin Power Gauge rating.

Cost & Other Expenses

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 0.35%, making it on par with most peer products in the space.

CSML's 12-month trailing dividend yield is 1.34%.

Sector Exposure and Top Holdings

Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.

Representing 27.40% of the portfolio, the fund has heaviest allocation to the Financials sector; Industrials and Information Technology round out the top three.

Taking into account individual holdings, Turning Point Therapeutic (TPTX) accounts for about 0.64% of the fund's total assets, followed by H&r Block Inc (HRB) and Grid Dynamics Holdings In (GDYN).

CSML's top 10 holdings account for about 3.28% of its total assets under management.

Performance and Risk

So far this year, CSML has lost about -10.62%, and is down about -3.04% in the last one year (as of 08/05/2022). During this past 52-week period, the fund has traded between $29.20 and $38.36.

The ETF has a beta of 1.24 and standard deviation of 31.54% for the trailing three-year period. With about 501 holdings, it effectively diversifies company-specific risk.

Alternatives

IQ Chaikin U.S. Small Cap ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.

IShares Russell 2000 ETF (IWM) tracks Russell 2000 Index and the iShares Core S&P SmallCap ETF (IJR) tracks S&P SmallCap 600 Index. IShares Russell 2000 ETF has $54.85 billion in assets, iShares Core S&P SmallCap ETF has $68.03 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Small Cap Blend.

Bottom Line

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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IQ Chaikin U.S. Small Cap ETF (CSML): ETF Research Reports
 
H&R Block, Inc. (HRB) : Free Stock Analysis Report
 
iShares Russell 2000 ETF (IWM): ETF Research Reports
 
iShares Core S&P SmallCap ETF (IJR): ETF Research Reports
 
Turning Point Therapeutics, Inc. (TPTX) : Free Stock Analysis Report
 
Grid Dynamics Holdings, Inc. (GDYN) : Free Stock Analysis Report
 
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