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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) was launched on 04/28/2015, 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?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
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.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
SMLF is managed by Blackrock, and this fund has amassed over $749.20 million, which makes it one of the average sized ETFs in the Style Box - Small Cap Blend. Before fees and expenses, SMLF seeks to match the performance of the MSCI USA Small Cap Diversified Multiple-Factor Index.
The STOXX U.S. Small-Cap Equity Factor Index (USD) composed of U.S. small-capitalization stocks that have favourable exposure to target style factors subject to constraints.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
With one of the cheaper products in the space, this ETF has annual operating expenses of 0.15%.
SMLF's 12-month trailing dividend yield is 1.61%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 18.70% of the portfolio, the fund has heaviest allocation to the Industrials sector; Financials and Consumer Discretionary round out the top three.
Taking into account individual holdings, Jabil Inc (JBL - Free Report) accounts for about 0.77% of the fund's total assets, followed by First Industrial Realty Trust Inc (FR - Free Report) and Builders Firstsource Inc (BLDR - Free Report) .
Its top 10 holdings account for approximately 5.86% of SMLF's total assets under management.
Performance and Risk
The ETF return is roughly 7.16% and is up about 3% so far this year and in the past one year (as of 11/21/2023), respectively. SMLF has traded between $47.85 and $56.62 during this last 52-week period.
SMLF has a beta of 1.11 and standard deviation of 21.83% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 863 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 $54.74 billion in assets, iShares Core S&P Small-Cap ETF has $67.97 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) was launched on 04/28/2015, 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?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
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.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
SMLF is managed by Blackrock, and this fund has amassed over $749.20 million, which makes it one of the average sized ETFs in the Style Box - Small Cap Blend. Before fees and expenses, SMLF seeks to match the performance of the MSCI USA Small Cap Diversified Multiple-Factor Index.
The STOXX U.S. Small-Cap Equity Factor Index (USD) composed of U.S. small-capitalization stocks that have favourable exposure to target style factors subject to constraints.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
With one of the cheaper products in the space, this ETF has annual operating expenses of 0.15%.
SMLF's 12-month trailing dividend yield is 1.61%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 18.70% of the portfolio, the fund has heaviest allocation to the Industrials sector; Financials and Consumer Discretionary round out the top three.
Taking into account individual holdings, Jabil Inc (JBL - Free Report) accounts for about 0.77% of the fund's total assets, followed by First Industrial Realty Trust Inc (FR - Free Report) and Builders Firstsource Inc (BLDR - Free Report) .
Its top 10 holdings account for approximately 5.86% of SMLF's total assets under management.
Performance and Risk
The ETF return is roughly 7.16% and is up about 3% so far this year and in the past one year (as of 11/21/2023), respectively. SMLF has traded between $47.85 and $56.62 during this last 52-week period.
SMLF has a beta of 1.11 and standard deviation of 21.83% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 863 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 $54.74 billion in assets, iShares Core S&P Small-Cap ETF has $67.97 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.