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Is IQ Chaikin U.S. Small Cap ETF (CSML) a Strong ETF Right Now?
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The IQ Chaikin U.S. Small Cap ETF 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 traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by New York Life Investments. CSML has been able to amass assets over $272.79 million, making it one of the average sized ETFs in the Style Box - Small Cap Blend. Before fees and expenses, this particular fund 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
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 on par with most peer products in the space, this ETF has annual operating expenses of 0.35%.
It has a 12-month trailing dividend yield of 1.22%.
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.
CSML's heaviest allocation is in the Financials sector, which is about 25.10% of the portfolio. Its Industrials and Healthcare round out the top three.
Looking at individual holdings, Immunovant Inc (IMVT - Free Report) accounts for about 0.59% of total assets, followed by Super Micro Computer Inc (SMCI - Free Report) and Ars Pharmaceuticals Inc (SPRY - Free Report) .
CSML's top 10 holdings account for about 4.37% of its total assets under management.
Performance and Risk
Year-to-date, the IQ Chaikin U.S. Small Cap ETF return is roughly 8.34% so far, and is up about 1.21% over the last 12 months (as of 02/13/2023). CSML has traded between $28.77 and $35.86 in this past 52-week period.
The ETF has a beta of 1.23 and standard deviation of 32.10% for the trailing three-year period. With about 491 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 - 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 $55.93 billion in assets, iShares Core S&P Small-Cap ETF has $71.54 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 IQ Chaikin U.S. Small Cap ETF (CSML) a Strong ETF Right Now?
The IQ Chaikin U.S. Small Cap ETF 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 traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by New York Life Investments. CSML has been able to amass assets over $272.79 million, making it one of the average sized ETFs in the Style Box - Small Cap Blend. Before fees and expenses, this particular fund 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
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 on par with most peer products in the space, this ETF has annual operating expenses of 0.35%.
It has a 12-month trailing dividend yield of 1.22%.
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.
CSML's heaviest allocation is in the Financials sector, which is about 25.10% of the portfolio. Its Industrials and Healthcare round out the top three.
Looking at individual holdings, Immunovant Inc (IMVT - Free Report) accounts for about 0.59% of total assets, followed by Super Micro Computer Inc (SMCI - Free Report) and Ars Pharmaceuticals Inc (SPRY - Free Report) .
CSML's top 10 holdings account for about 4.37% of its total assets under management.
Performance and Risk
Year-to-date, the IQ Chaikin U.S. Small Cap ETF return is roughly 8.34% so far, and is up about 1.21% over the last 12 months (as of 02/13/2023). CSML has traded between $28.77 and $35.86 in this past 52-week period.
The ETF has a beta of 1.23 and standard deviation of 32.10% for the trailing three-year period. With about 491 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 - 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 $55.93 billion in assets, iShares Core S&P Small-Cap ETF has $71.54 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.