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Is iShares MSCI USA SmallCap Multifactor ETF (SMLF) a Strong ETF Right Now?
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Launched on 04/28/2015, the iShares MSCI USA SmallCap Multifactor ETF (SMLF - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Small Cap Blend category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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 managed by Blackrock, and has been able to amass over $996.47 million, which makes it one of the larger ETFs in the Style Box - Small Cap Blend. Before fees and expenses, this particular fund seeks to match the performance of the MSCI USA Small Cap Diversified Multiple-Factor Index.
The MSCI USA Small Cap Diversified Multiple-Factor Index is designed to select equity securities from MSCI USA Small Cap Index that have high exposure to four investment style factors: value, quality, momentum and low size.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.30%, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.15%.
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.
For SMLF, it has heaviest allocation in the Healthcare sector --about 19.10% of the portfolio --while Information Technology and Consumer Discretionary round out the top three.
When you look at individual holdings, Williams Sonoma Inc (WSM - Free Report) accounts for about 1.31% of the fund's total assets, followed by Deckers Outdoor Corp (DECK - Free Report) and Quanta Services Inc (PWR - Free Report) .
Its top 10 holdings account for approximately 6.48% of SMLF's total assets under management.
Performance and Risk
So far this year, SMLF has lost about -7.23%, and is up about 4.67% in the last one year (as of 03/02/2022). During this past 52-week period, the fund has traded between $49.06 and $59.93.
The fund has a beta of 1.10 and standard deviation of 27.11% for the trailing three-year period, which makes SMLF a high risk choice in this particular space. With about 489 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares MSCI USA SmallCap Multifactor 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 SmallCap ETF (IJR - Free Report) tracks S&P SmallCap 600 Index. IShares Russell 2000 ETF has $60.61 billion in assets, iShares Core S&P SmallCap ETF has $69.63 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 MSCI USA SmallCap Multifactor ETF (SMLF) a Strong ETF Right Now?
Launched on 04/28/2015, the iShares MSCI USA SmallCap Multifactor ETF (SMLF - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Small Cap Blend category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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 managed by Blackrock, and has been able to amass over $996.47 million, which makes it one of the larger ETFs in the Style Box - Small Cap Blend. Before fees and expenses, this particular fund seeks to match the performance of the MSCI USA Small Cap Diversified Multiple-Factor Index.
The MSCI USA Small Cap Diversified Multiple-Factor Index is designed to select equity securities from MSCI USA Small Cap Index that have high exposure to four investment style factors: value, quality, momentum and low size.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.30%, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.15%.
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.
For SMLF, it has heaviest allocation in the Healthcare sector --about 19.10% of the portfolio --while Information Technology and Consumer Discretionary round out the top three.
When you look at individual holdings, Williams Sonoma Inc (WSM - Free Report) accounts for about 1.31% of the fund's total assets, followed by Deckers Outdoor Corp (DECK - Free Report) and Quanta Services Inc (PWR - Free Report) .
Its top 10 holdings account for approximately 6.48% of SMLF's total assets under management.
Performance and Risk
So far this year, SMLF has lost about -7.23%, and is up about 4.67% in the last one year (as of 03/02/2022). During this past 52-week period, the fund has traded between $49.06 and $59.93.
The fund has a beta of 1.10 and standard deviation of 27.11% for the trailing three-year period, which makes SMLF a high risk choice in this particular space. With about 489 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares MSCI USA SmallCap Multifactor 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 SmallCap ETF (IJR - Free Report) tracks S&P SmallCap 600 Index. IShares Russell 2000 ETF has $60.61 billion in assets, iShares Core S&P SmallCap ETF has $69.63 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.