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Should IQ Chaikin U.S. Small Cap ETF (CSML) Be on Your Investing Radar?

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Launched on 05/16/2017, the IQ Chaikin U.S. Small Cap ETF is a passively managed exchange traded fund designed to provide a broad exposure to the Small Cap Blend segment of the US equity market.

The fund is sponsored by Indexiq. It has amassed assets over $463.74 M, making it one of the average sized ETFs attempting to match the Small Cap Blend segment of the US equity market.

Why Small Cap Blend

Sitting at a market capitalization below $2 billion, small cap companies tend to be high-potential stocks compared to its large and mid cap counterparts, but come with higher risk.

Typically holding a combination of both growth and value stocks, blend ETFs also demonstrate qualities seen in value and growth investments.

Costs

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.35%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.46%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Industrials sector--about 27.90% of the portfolio. Financials and Consumer Discretionary round out the top three.

Looking at individual holdings, Brinker International Inc (EAT - Free Report) accounts for about 0.56% of total assets, followed by First Bancorp/puerto Rico (FBP - Free Report) and Heidrick & Struggles International Inc (HSII - Free Report) .

The top 10 holdings account for about 5.4% of total assets under management.

Performance and Risk

CSML seeks to match the performance of the NASDAQ Chaikin Power US Small Cap Index before fees and expenses. 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.

The ETF has lost about -3.47% so far this year and was up about 0% in the last one year (as of 05/04/2018). In the past 52-week period, it has traded between $24.03 and $29.45.

With about 222 holdings, it effectively diversifies company-specific risk.

Bottom-Line

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

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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Brinker International, Inc. (EAT) - free report >>

Heidrick & Struggles International, Inc. (HSII) - free report >>

First BanCorp. (FBP) - free report >>