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Is iShares US SmallCap Equity Fac (SMLF) a Strong ETF Right Now?
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The iShares US SmallCap Equity Fac (SMLF - Free Report) made its debut on 04/28/2015, and is a smart beta exchange traded fund that provides 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.
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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
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
SMLF is managed by Blackrock, and this fund has amassed over $788.39 million, which makes it one of the average sized ETFs in the Style Box - Small Cap Blend. SMLF seeks to match the performance of the MSCI USA Small Cap Diversified Multiple-Factor Index before fees and expenses.
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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.15% for SMLF, making it one of the cheaper products in the space.
SMLF's 12-month trailing dividend yield is 1.48%.
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.
This ETF has heaviest allocation in the Industrials sector - about 18.20% of the portfolio. Financials and Information Technology round out the top three.
Taking into account individual holdings, Blk Csh Fnd Treasury Sl Agency (XTSLA) accounts for about 2.14% of the fund's total assets, followed by First Industrial Realty Trust Inc (FR - Free Report) and Fair Isaac Corp (FICO - Free Report) .
SMLF's top 10 holdings account for about 7.39% of its total assets under management.
Performance and Risk
Year-to-date, the iShares US SmallCap Equity Fac has added about 11.45% so far, and is up roughly 20.19% over the last 12 months (as of 07/17/2023). SMLF has traded between $44.10 and $56.09 in this past 52-week period.
The ETF has a beta of 1.10 and standard deviation of 22.04% for the trailing three-year period, making it a high risk choice in the space. With about 883 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares US SmallCap Equity Fac 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 $54.86 billion in assets, iShares Core S&P Small-Cap ETF has $70.54 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 iShares US SmallCap Equity Fac (SMLF) a Strong ETF Right Now?
The iShares US SmallCap Equity Fac (SMLF - Free Report) made its debut on 04/28/2015, and is a smart beta exchange traded fund that provides 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.
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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
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
SMLF is managed by Blackrock, and this fund has amassed over $788.39 million, which makes it one of the average sized ETFs in the Style Box - Small Cap Blend. SMLF seeks to match the performance of the MSCI USA Small Cap Diversified Multiple-Factor Index before fees and expenses.
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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.15% for SMLF, making it one of the cheaper products in the space.
SMLF's 12-month trailing dividend yield is 1.48%.
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.
This ETF has heaviest allocation in the Industrials sector - about 18.20% of the portfolio. Financials and Information Technology round out the top three.
Taking into account individual holdings, Blk Csh Fnd Treasury Sl Agency (XTSLA) accounts for about 2.14% of the fund's total assets, followed by First Industrial Realty Trust Inc (FR - Free Report) and Fair Isaac Corp (FICO - Free Report) .
SMLF's top 10 holdings account for about 7.39% of its total assets under management.
Performance and Risk
Year-to-date, the iShares US SmallCap Equity Fac has added about 11.45% so far, and is up roughly 20.19% over the last 12 months (as of 07/17/2023). SMLF has traded between $44.10 and $56.09 in this past 52-week period.
The ETF has a beta of 1.10 and standard deviation of 22.04% for the trailing three-year period, making it a high risk choice in the space. With about 883 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares US SmallCap Equity Fac 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 $54.86 billion in assets, iShares Core S&P Small-Cap ETF has $70.54 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.