Yahoo Finance Is Invesco Russell 2000 Dynamic Multifactor ETF (OMFS) a Strong ETF Right Now?
Launched on 11/08/2017, the Invesco Russell 2000 Dynamic Multifactor ETF (OMFS) is a smart beta exchange traded fund offering broad exposure to the Style Box - Small Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
The fund is sponsored by Invesco. It has amassed assets over $229.34 million, making it one of the average sized ETFs in the Style Box - Small Cap Blend. This particular fund 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.
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.
Operating expenses on an annual basis are 0.39% for OMFS, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.70%.
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.
Representing 26.20% of the portfolio, the fund has heaviest allocation to the Financials sector; Industrials and Consumer Discretionary round out the top three.
Taking into account individual holdings, Modine Manufacturing Co (MOD) accounts for about 0.81% of the fund's total assets, followed by Titan Machinery Inc (TITN) and Geo Group Inc/the (GEO).
Its top 10 holdings account for approximately 5.93% of OMFS's total assets under management.
Performance and Risk
The ETF return is roughly 8.05% so far this year and was up about 0.42% in the last one year (as of 01/30/2023). In the past 52-week period, it has traded between $31.60 and $39.90.
The fund has a beta of 1.09 and standard deviation of 33.01% for the trailing three-year period. With about 695 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 $54.76 billion in assets, iShares Core S&P Small-Cap ETF has $70.32 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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Invesco Russell 2000 Dynamic Multifactor ETF (OMFS): ETF Research Reports
Titan Machinery Inc. (TITN) : Free Stock Analysis Report
Geo Group Inc (The) (GEO) : Free Stock Analysis Report
iShares Russell 2000 ETF (IWM): ETF Research Reports
Modine Manufacturing Company (MOD) : Free Stock Analysis Report
iShares Core S&P Small-Cap ETF (IJR): ETF Research Reports
