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Is iShares U.S. Small-Cap Equity Factor ETF (SMLF) a Strong ETF Right Now?
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A smart beta exchange traded fund, the iShares U.S. Small-Cap Equity Factor ETF (SMLF - Free Report) debuted on 04/28/2015, and offers broad exposure to the Style Box - Small Cap Blend 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as 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
Managed by Blackrock, SMLF has amassed assets over $1.35 billion, making it one of the larger ETFs in the Style Box - Small Cap Blend. This particular fund seeks to match the performance of the MSCI USA Small Cap Diversified Multiple-Factor Index before fees and expenses.
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
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 SMLF are 0.15%, which makes it one of the cheaper products in the space.
The fund has a 12-month trailing dividend yield of 0.92%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
SMLF's heaviest allocation is in the Industrials sector, which is about 18.30% of the portfolio. Its Financials and Information Technology round out the top three.
When you look at individual holdings, Blk Csh Fnd Treasury Sl Agency (XTSLA) accounts for about 0.76% of the fund's total assets, followed by Emcor Group Inc (EME - Free Report) and Evercore Inc Class A (EVR - Free Report) .
Performance and Risk
The ETF return is roughly 13.43% so far this year and is up about 30.85% in the last one year (as of 10/10/2024). In the past 52-week period, it has traded between $47.85 and $66.69.
The fund has a beta of 1.09 and standard deviation of 21.21% for the trailing three-year period, which makes SMLF a high risk choice in this particular space. With about 863 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 $68.10 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%.
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?
A smart beta exchange traded fund, the iShares U.S. Small-Cap Equity Factor ETF (SMLF - Free Report) debuted on 04/28/2015, and offers broad exposure to the Style Box - Small Cap Blend 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as 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
Managed by Blackrock, SMLF has amassed assets over $1.35 billion, making it one of the larger ETFs in the Style Box - Small Cap Blend. This particular fund seeks to match the performance of the MSCI USA Small Cap Diversified Multiple-Factor Index before fees and expenses.
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
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 SMLF are 0.15%, which makes it one of the cheaper products in the space.
The fund has a 12-month trailing dividend yield of 0.92%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
SMLF's heaviest allocation is in the Industrials sector, which is about 18.30% of the portfolio. Its Financials and Information Technology round out the top three.
When you look at individual holdings, Blk Csh Fnd Treasury Sl Agency (XTSLA) accounts for about 0.76% of the fund's total assets, followed by Emcor Group Inc (EME - Free Report) and Evercore Inc Class A (EVR - Free Report) .
Performance and Risk
The ETF return is roughly 13.43% so far this year and is up about 30.85% in the last one year (as of 10/10/2024). In the past 52-week period, it has traded between $47.85 and $66.69.
The fund has a beta of 1.09 and standard deviation of 21.21% for the trailing three-year period, which makes SMLF a high risk choice in this particular space. With about 863 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 $68.10 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%.
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.