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Should Invesco Russell 2000 Dynamic Multifactor ETF (OMFS) Be on Your Investing Radar?

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If you're interested in broad exposure to the Small Cap Blend segment of the US equity market, look no further than the Invesco Russell 2000 Dynamic Multifactor ETF (OMFS - Free Report) , a passively managed exchange traded fund launched on 11/08/2017.

The fund is sponsored by Invesco. It has amassed assets over $268.73 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 are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.39%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.58%.

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 Financials sector--about 25.50% of the portfolio. Industrials and Information Technology round out the top three.

Looking at individual holdings, Sprouts Farmers Market Inc (SFM - Free Report) accounts for about 2.26% of total assets, followed by Fabrinet (FN - Free Report) and Commvault Systems Inc (CVLT - Free Report) .

The top 10 holdings account for about 12.34% of total assets under management.

Performance and Risk

OMFS seeks to match the performance of the RUSSELL 2000 INVESCO DYNAMIC MLTIFCTR ID before fees and expenses. 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.

The ETF has gained about 3.07% so far this year and is up roughly 19.44% in the last one year (as of 10/10/2024). In the past 52-week period, it has traded between $31.78 and $39.90.

The ETF has a beta of 1.10 and standard deviation of 21.57% for the trailing three-year period. With about 680 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco Russell 2000 Dynamic Multifactor 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, OMFS 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 $68.10 billion in assets, iShares Core S&P Small-Cap ETF has $84.84 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.

Bottom-Line

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they 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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