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Is iShares International Small-Cap Equity Factor ETF (ISCF) a Strong ETF Right Now?

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Making its debut on 04/28/2015, smart beta exchange traded fund iShares International Small-Cap Equity Factor ETF (ISCF - Free Report) provides investors broad exposure to the Foreign Small/Mid Blend ETF 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.

A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.

If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking 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.

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 sponsored by Blackrock. It has amassed assets over $559.02 million, making it one of the average sized ETFs in the Foreign Small/Mid Blend ETF. ISCF, before fees and expenses, seeks to match the performance of the MSCI World exUSA Small Cap Diversified Multiple-Factor Index.

The STOXX International Small-Cap Equity Factor Index composes of global developed market small-capitalization stocks, excluding the US, that have favourable exposure to target style factors subject to constraints.

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.

Operating expenses on an annual basis are 0.23% for ISCF, making it one of the cheaper products in the space.

ISCF's 12-month trailing dividend yield is 4.09%.

Sector Exposure and Top Holdings

Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.

When you look at individual holdings, Banco De Sabadell Sa (SAB) accounts for about 0.63% of the fund's total assets, followed by Swissquote Group Holding Sa (SQN) and Celestica Inc (CLS - Free Report) .

ISCF's top 10 holdings account for about 5.05% of its total assets under management.

Performance and Risk

So far this year, ISCF has added roughly 4.96%, and is up about 14.43% in the last one year (as of 02/14/2025). During this past 52-week period, the fund has traded between $31.39 and $35.47.

The ETF has a beta of 0.95 and standard deviation of 16.95% for the trailing three-year period, making it a medium risk choice in the space. With about 1094 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares International Small-Cap Equity Factor ETF is a reasonable option for investors seeking to outperform the Foreign Small/Mid Blend ETF segment of the market. However, there are other ETFs in the space which investors could consider.

Dimensional International Small Cap ETF (DFIS - Free Report) tracks ---------------------------------------- and the Schwab International Small-Cap Equity ETF (SCHC - Free Report) tracks FTSE DEVELOPED SMALL CAP EX US LIQUID INDEX. Dimensional International Small Cap ETF has $2.57 billion in assets, Schwab International Small-Cap Equity ETF has $4.09 billion. DFIS has an expense ratio of 0.39% and SCHC charges 0.11%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Foreign Small/Mid Blend ETF.

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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