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Should Invesco Russell 2000 Dynamic Multifactor ETF (OMFS) Be on Your Investing Radar?

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Designed to provide broad exposure to the Small Cap Blend segment of the US equity market, the Invesco Russell 2000 Dynamic Multifactor ETF (OMFS - Free Report) is a passively managed exchange traded fund launched on 11/08/2017.

The fund is sponsored by Invesco. It has amassed assets over $210.32 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.

Typically holding a combination of both growth and value stocks, blend ETFs also demonstrate qualities seen in value and growth investments.

Costs

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 0.82%.

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 21.20% of the portfolio. Industrials and Consumer Discretionary round out the top three.

Looking at individual holdings, Lendingclub Corp (LC - Free Report) accounts for about 0.90% of total assets, followed by Veritiv Corp (VRTV - Free Report) and Signet Jewelers Ltd (SIG - Free Report) .

The top 10 holdings account for about 5.97% 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 lost about -8.94% so far this year and is down about -1.95% in the last one year (as of 04/08/2022). In the past 52-week period, it has traded between $37.34 and $45.36.

The ETF has a beta of 1.13 and standard deviation of 31.60% for the trailing three-year period. With about 1095 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco Russell 2000 Dynamic Multifactor ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, OMFS is a great option for investors seeking exposure to the Style Box - Small Cap Blend segment of the market. There are other additional ETFs in the space that investors could consider as well.

The iShares Russell 2000 ETF (IWM - Free Report) and the iShares Core S&P SmallCap ETF (IJR - Free Report) track a similar index. While iShares Russell 2000 ETF has $60.11 billion in assets, iShares Core S&P SmallCap ETF has $70.13 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.

Bottom-Line

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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