Should Invesco Russell 2000 Dynamic Multifactor ETF (OMFS) Be on Your Investing Radar? – November 18, 2022
Launched on 11/08/2017, the Invesco Russell 2000 Dynamic Multifactor ETF (OMFS – Free Report) 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 Invesco. It has amassed assets over $202.16 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
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.
Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.
Costs
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.
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 1.56%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector–about 27.40% of the portfolio. Industrials and Information Technology round out the top three.
Looking at individual holdings, Murphy Usa Inc (MUSA – Free Report) accounts for about 1.67% of total assets, followed by Kinsale Capital Group Inc (KNSL – Free Report) and Exlservice Holdings Inc (EXLS – Free Report) .
The top 10 holdings account for about 10.19% 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 lost about -13.95% so far this year and is down about -17.90% in the last one year (as of 11/18/2022). In the past 52-week period, it has traded between $31.60 and $43.93.
The ETF has a beta of 1.10 and standard deviation of 32.92% for the trailing three-year period. With about 762 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 sufficient 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 SmallCap ETF (IJR – Free Report) track a similar index. While iShares Russell 2000 ETF has $55.06 billion in assets, iShares Core S&P SmallCap ETF has $67.56 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.
