Launched on 04/28/2015, the iShares US SmallCap Equity Fac (SMLF – 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 Blackrock. It has amassed assets over $870.57 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 0.15%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 1.51%.
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.
This ETF has heaviest allocation to the Industrials sector–about 18.40% of the portfolio. Financials and Information Technology round out the top three.
Looking at individual holdings, Blk Csh Fnd Treasury Sl Agency (XTSLA) accounts for about 2.14% of total assets, followed by First Industrial Realty Trust Inc (FR – Free Report) and Fair Isaac Corp (FICO – Free Report) .
The top 10 holdings account for about 7.39% of total assets under management.
Performance and Risk
SMLF seeks to match the performance of the MSCI USA Small Cap Diversified Multiple-Factor Index before fees and expenses. The MSCI USA Small Cap Diversified Multiple-Factor Index is designed to select equity securities from MSCI USA Small Cap Index that have high exposure to four investment style factors: value, quality, momentum and low size.
The ETF has added about 9.37% so far this year and is up about 15.86% in the last one year (as of 07/04/2023). In the past 52-week period, it has traded between $44.10 and $56.09.
The ETF has a beta of 1.10 and standard deviation of 22.09% for the trailing three-year period, making it a high risk choice in the space. With about 883 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares US SmallCap Equity Fac carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, SMLF 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 Small-Cap ETF (IJR – Free Report) track a similar index. While iShares Russell 2000 ETF has $54.81 billion in assets, iShares Core S&P Small-Cap ETF has $69.41 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.
Bottom-Line
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
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.
