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Is iShares U.S. Small-Cap Equity Factor ETF (SMLF) a Strong ETF Right Now?
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The iShares U.S. Small-Cap Equity Factor ETF (SMLF - Free Report) was launched on 04/28/2015, 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?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $980.62 million, this makes it one of the average sized ETFs in the Style Box - Small Cap Blend. SMLF is managed by Blackrock. This particular fund seeks to match the performance of the MSCI USA Small Cap Diversified Multiple-Factor Index before fees and expenses.
The STOXX U.S. Small-Cap Equity Factor Index (USD) composed of U.S. small-capitalization stocks that have favourable exposure to target style factors subject to constraints.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With one of the cheaper products in the space, this ETF has annual operating expenses of 0.15%.
It has a 12-month trailing dividend yield of 1.06%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 19.90% of the portfolio, the fund has heaviest allocation to the Industrials sector; Consumer Discretionary and Information Technology round out the top three.
When you look at individual holdings, Super Micro Computer Inc (SMCI - Free Report) accounts for about 0.90% of the fund's total assets, followed by Builders Firstsource Inc (BLDR - Free Report) and Deckers Outdoor Corp (DECK - Free Report) .
SMLF's top 10 holdings account for about 6.67% of its total assets under management.
Performance and Risk
Year-to-date, the iShares U.S. Small-Cap Equity Factor ETF has added roughly 6.48% so far, and is up about 28.86% over the last 12 months (as of 03/25/2024). SMLF has traded between $47.85 and $63.01 in this past 52-week period.
SMLF has a beta of 1.10 and standard deviation of 21.42% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 824 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares U.S. Small-Cap Equity Factor 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 - Free Report) tracks Russell 2000 Index and the iShares Core S&P Small-Cap ETF (IJR - Free Report) tracks S&P SmallCap 600 Index. IShares Russell 2000 ETF has $62.71 billion in assets, iShares Core S&P Small-Cap ETF has $78.04 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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Is iShares U.S. Small-Cap Equity Factor ETF (SMLF) a Strong ETF Right Now?
The iShares U.S. Small-Cap Equity Factor ETF (SMLF - Free Report) was launched on 04/28/2015, 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?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $980.62 million, this makes it one of the average sized ETFs in the Style Box - Small Cap Blend. SMLF is managed by Blackrock. This particular fund seeks to match the performance of the MSCI USA Small Cap Diversified Multiple-Factor Index before fees and expenses.
The STOXX U.S. Small-Cap Equity Factor Index (USD) composed of U.S. small-capitalization stocks that have favourable exposure to target style factors subject to constraints.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With one of the cheaper products in the space, this ETF has annual operating expenses of 0.15%.
It has a 12-month trailing dividend yield of 1.06%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 19.90% of the portfolio, the fund has heaviest allocation to the Industrials sector; Consumer Discretionary and Information Technology round out the top three.
When you look at individual holdings, Super Micro Computer Inc (SMCI - Free Report) accounts for about 0.90% of the fund's total assets, followed by Builders Firstsource Inc (BLDR - Free Report) and Deckers Outdoor Corp (DECK - Free Report) .
SMLF's top 10 holdings account for about 6.67% of its total assets under management.
Performance and Risk
Year-to-date, the iShares U.S. Small-Cap Equity Factor ETF has added roughly 6.48% so far, and is up about 28.86% over the last 12 months (as of 03/25/2024). SMLF has traded between $47.85 and $63.01 in this past 52-week period.
SMLF has a beta of 1.10 and standard deviation of 21.42% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 824 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares U.S. Small-Cap Equity Factor 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 - Free Report) tracks Russell 2000 Index and the iShares Core S&P Small-Cap ETF (IJR - Free Report) tracks S&P SmallCap 600 Index. IShares Russell 2000 ETF has $62.71 billion in assets, iShares Core S&P Small-Cap ETF has $78.04 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.