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Should iShares MSCI USA Small-Cap Min Vol Factor ETF (SMMV) Be on Your Investing Radar?

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Designed to provide broad exposure to the Small Cap Blend segment of the US equity market, the iShares MSCI USA Small-Cap Min Vol Factor ETF (SMMV - Free Report) is a passively managed exchange traded fund launched on 09/07/2016.

The fund is sponsored by Blackrock. It has amassed assets over $798.46 million, 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

With more potential comes more risk, and small cap companies, with market capitalization below $2 billion, epitomizes this way of thinking.

Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.

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 0.20%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.44%.

Sector Exposure and Top Holdings

ETFs offer a 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 to the Healthcare sector--about 18.10% of the portfolio. Financials and Industrials round out the top three.

Looking at individual holdings, Murphy Usa Inc- (MUSA - Free Report) accounts for about 1.54% of total assets, followed by Old Republic International Corp- (ORI - Free Report) and Aptargroup Inc- (ATR - Free Report) .

The top 10 holdings account for about 13.88% of total assets under management.

Performance and Risk

SMMV seeks to match the performance of the MSCI USA Small Cap Minimum Volatility (USD) Index before fees and expenses. The MSCI USA Small Cap Minimum Volatility (USD) Index comprises of small-capitalization U.S. equities that, in the aggregate, have lower volatility characteristics relative to the small-capitalization U.S. equity market.

The ETF has added roughly 8.23% so far this year and was up about 13.20% in the last one year (as of 07/16/2024). In the past 52-week period, it has traded between $32.10 and $38.41.

The ETF has a beta of 0.79 and standard deviation of 13.99% for the trailing three-year period. With about 299 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares MSCI USA Small-Cap Min Vol Factor ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, SMMV is a reasonable option for those seeking exposure to the Style Box - Small Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Russell 2000 ETF (IWM - Free Report) and the iShares Core S&P Small-Cap ETF (IJR - Free Report) track a similar index. While iShares Russell 2000 ETF has $64.14 billion in assets, iShares Core S&P Small-Cap ETF has $81.97 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.

Bottom-Line

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

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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