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Is Invesco Russell 2000 Dynamic Multifactor ETF (OMFS) a Strong ETF Right Now?
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The Invesco Russell 2000 Dynamic Multifactor ETF (OMFS - Free Report) was launched on 11/08/2017, 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?
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.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
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
The fund is managed by Invesco, and has been able to amass over $403.97 million, which makes it one of the average sized ETFs in the Style Box - Small Cap Blend. This particular fund, before fees and expenses, seeks to match the performance of the RUSSELL 2000 INVESCO DYNAMIC MLTIFCTR ID.
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.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.39%.
It's 12-month trailing dividend yield comes in at 1.25%.
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.
OMFS's heaviest allocation is in the Industrials sector, which is about 23.10% of the portfolio. Its Consumer Discretionary and Financials round out the top three.
When you look at individual holdings, Modine Manufacturing Co (MOD - Free Report) accounts for about 0.64% of the fund's total assets, followed by Sterling Infrastructure Inc (STRL - Free Report) and Beazer Homes Usa Inc (BZH - Free Report) .
Its top 10 holdings account for approximately 4.65% of OMFS's total assets under management.
Performance and Risk
The ETF has added roughly 16.87% so far this year and was up about 19.38% in the last one year (as of 12/29/2023). In the past 52-week period, it has traded between $31.78 and $39.65.
OMFS has a beta of 1.12 and standard deviation of 22.76% for the trailing three-year period. With about 1133 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco Russell 2000 Dynamic Multifactor 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 $67.22 billion in assets, iShares Core S&P Small-Cap ETF has $77.99 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 Invesco Russell 2000 Dynamic Multifactor ETF (OMFS) a Strong ETF Right Now?
The Invesco Russell 2000 Dynamic Multifactor ETF (OMFS - Free Report) was launched on 11/08/2017, 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?
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.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
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
The fund is managed by Invesco, and has been able to amass over $403.97 million, which makes it one of the average sized ETFs in the Style Box - Small Cap Blend. This particular fund, before fees and expenses, seeks to match the performance of the RUSSELL 2000 INVESCO DYNAMIC MLTIFCTR ID.
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.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.39%.
It's 12-month trailing dividend yield comes in at 1.25%.
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.
OMFS's heaviest allocation is in the Industrials sector, which is about 23.10% of the portfolio. Its Consumer Discretionary and Financials round out the top three.
When you look at individual holdings, Modine Manufacturing Co (MOD - Free Report) accounts for about 0.64% of the fund's total assets, followed by Sterling Infrastructure Inc (STRL - Free Report) and Beazer Homes Usa Inc (BZH - Free Report) .
Its top 10 holdings account for approximately 4.65% of OMFS's total assets under management.
Performance and Risk
The ETF has added roughly 16.87% so far this year and was up about 19.38% in the last one year (as of 12/29/2023). In the past 52-week period, it has traded between $31.78 and $39.65.
OMFS has a beta of 1.12 and standard deviation of 22.76% for the trailing three-year period. With about 1133 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco Russell 2000 Dynamic Multifactor 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 $67.22 billion in assets, iShares Core S&P Small-Cap ETF has $77.99 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.