Dj Fabrinet Price Target Announced At $292.00/Share By Barclays

The Invesco Russell 2000 Dynamic Multifactor ETF (OMFS) made its debut on 11/08/2017, and is a smart beta exchange traded fund that provides 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.

Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.

There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.

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.

The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.

Fund Sponsor & Index

The fund is managed by Invesco. OMFS has been able to amass assets over $267.46 million, making it one of the average sized ETFs in the Style Box - Small Cap Blend. OMFS, before fees and expenses, seeks to match the performance of the RUSSELL 2000 INVESCO DYNAMIC MLTIFCTR ID.

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.

Cost & Other Expenses

When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.

Operating expenses on an annual basis are 0.39% for this ETF, which makes it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.45%.

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.

OMFS's heaviest allocation is in the Financials sector, which is about 25.70% of the portfolio. Its Industrials and Information Technology round out the top three.

Looking at individual holdings, Sprouts Farmers Market Inc (SFM) accounts for about 2.46% of total assets, followed by Fabrinet (FN) and Commvault Systems Inc (CVLT).

OMFS's top 10 holdings account for about 13.08% of its total assets under management.

Performance and Risk

The ETF has added about 12.27% so far this year and is up roughly 29.62% in the last one year (as of 11/07/2024). In the past 52-week period, it has traded between $32.87 and $43.02.

The fund has a beta of 1.10 and standard deviation of 21.79% for the trailing three-year period. With about 680 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco Russell 2000 Dynamic Multifactor 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) tracks Russell 2000 Index and the iShares Core S&P Small-Cap ETF (IJR) tracks S&P SmallCap 600 Index. IShares Russell 2000 ETF has $73.69 billion in assets, iShares Core S&P Small-Cap ETF has $92.41 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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