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Is iShares MSCI Intl SmallCap Multifactor ETF (ISCF) a Strong ETF Right Now?

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Launched on 04/28/2015, the iShares MSCI Intl SmallCap Multifactor ETF (ISCF - Free Report) is a smart beta exchange traded fund offering broad exposure to the Broad Developed World ETFs 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.

Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.

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.

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.

The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.

Fund Sponsor & Index

Managed by Blackrock, ISCF has amassed assets over $200.20 million, making it one of the average sized ETFs in the Broad Developed World ETFs. This particular fund, before fees and expenses, seeks to match the performance of the MSCI World exUSA Small Cap Diversified Multiple-Factor Index.

The MSCI World exUSA Small Cap Diversified Multiple-Factor Index is designed to select equity securities from MSCI World ex USA Small Cap Index that have high exposure to four investment style factors: value, quality, momentum and low size.

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.

Operating expenses on an annual basis are 0.40% for this ETF, which makes it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 4.34%.

Sector Exposure and Top Holdings

ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

Taking into account individual holdings, Mitsui Osk Lines Ltd accounts for about 1.23% of the fund's total assets, followed by Arc Resources Ltd (ARX) and Signify Nv (LIGHT).

Its top 10 holdings account for approximately 8.81% of ISCF's total assets under management.

Performance and Risk

So far this year, ISCF has lost about -9.54%, and is down about -5.92% in the last one year (as of 05/05/2022). During this past 52-week period, the fund has traded between $31.89 and $38.87.

The fund has a beta of 0.93 and standard deviation of 21.30% for the trailing three-year period, which makes ISCF a medium risk choice in this particular space. With about 783 holdings, it effectively diversifies company-specific risk.


IShares MSCI Intl SmallCap Multifactor ETF is a reasonable option for investors seeking to outperform the Broad Developed World ETFs segment of the market. However, there are other ETFs in the space which investors could consider.

Vanguard Total International Stock ETF (VXUS - Free Report) tracks FTSE Global All Cap ex US Index and the Vanguard FTSE Developed Markets ETF (VEA - Free Report) tracks FTSE Developed All Cap ex US Index. Vanguard Total International Stock ETF has $49.57 billion in assets, Vanguard FTSE Developed Markets ETF has $101.84 billion. VXUS has an expense ratio of 0.07% and VEA charges 0.05%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Developed World ETFs.

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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