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Is iShares U.S. Small-Cap Equity Factor ETF (SMLF) a Strong ETF Right Now?
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Launched on 04/28/2015, the iShares U.S. Small-Cap Equity Factor ETF (SMLF - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Small Cap Blend category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
SMLF is managed by Blackrock, and this fund has amassed over $1.15 billion, which makes it one of the larger ETFs in the Style Box - Small Cap Blend. This particular fund, before fees and expenses, 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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.15%.
SMLF's 12-month trailing dividend yield is 0.96%.
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.
Representing 18.20% of the portfolio, the fund has heaviest allocation to the Industrials sector; Financials and Consumer Discretionary round out the top three.
When you look at individual holdings, Emcor Group Inc- (EME - Free Report) accounts for about 0.78% of the fund's total assets, followed by Evercore Inc Class A- (EVR - Free Report) and Deckers Outdoor Corp- (DECK - Free Report) .
Performance and Risk
Year-to-date, the iShares U.S. Small-Cap Equity Factor ETF return is roughly 5.52% so far, and is up about 12.05% over the last 12 months (as of 08/05/2024). SMLF has traded between $47.85 and $65.72 in this past 52-week period.
SMLF has a beta of 1.10 and standard deviation of 21.07% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 861 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares U.S. Small-Cap Equity Factor 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 $68.32 billion in assets, iShares Core S&P Small-Cap ETF has $81.55 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 U.S. Small-Cap Equity Factor ETF (SMLF) a Strong ETF Right Now?
Launched on 04/28/2015, the iShares U.S. Small-Cap Equity Factor ETF (SMLF - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Small Cap Blend category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
SMLF is managed by Blackrock, and this fund has amassed over $1.15 billion, which makes it one of the larger ETFs in the Style Box - Small Cap Blend. This particular fund, before fees and expenses, 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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.15%.
SMLF's 12-month trailing dividend yield is 0.96%.
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.
Representing 18.20% of the portfolio, the fund has heaviest allocation to the Industrials sector; Financials and Consumer Discretionary round out the top three.
When you look at individual holdings, Emcor Group Inc- (EME - Free Report) accounts for about 0.78% of the fund's total assets, followed by Evercore Inc Class A- (EVR - Free Report) and Deckers Outdoor Corp- (DECK - Free Report) .
Performance and Risk
Year-to-date, the iShares U.S. Small-Cap Equity Factor ETF return is roughly 5.52% so far, and is up about 12.05% over the last 12 months (as of 08/05/2024). SMLF has traded between $47.85 and $65.72 in this past 52-week period.
SMLF has a beta of 1.10 and standard deviation of 21.07% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 861 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares U.S. Small-Cap Equity Factor 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 $68.32 billion in assets, iShares Core S&P Small-Cap ETF has $81.55 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.