Is Invesco Russell 1000 Dynamic Multifactor ETF (OMFL) a Strong ETF Right Now?
A smart beta exchange traded fund, the Invesco Russell 1000 Dynamic Multifactor ETF (OMFL) debuted on 11/08/2017, and offers broad exposure to the Style Box - Large Cap Growth category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of 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 sponsored by Invesco. It has amassed assets over $4.91 billion, making it one of the larger ETFs in the Style Box - Large Cap Growth. Before fees and expenses, OMFL seeks to match the performance of the RUSSELL 1000 INVESCO DYNAMIC MLTIFCTR ID.
The Russell 1000 Invesco Dynamic Multifactor Index is constructed using a rules-based methodology by selecting equity securities from the Russell 1000 Index, which measures the performance of the 1,000 largest-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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.29%.
The fund has a 12-month trailing dividend yield of 1.66%.
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.
Representing 21.70% of the portfolio, the fund has heaviest allocation to the Industrials sector; Information Technology and Consumer Discretionary round out the top three.
Taking into account individual holdings, Cardinal Health Inc (CAH) accounts for about 0.97% of the fund's total assets, followed by Jabil Inc (JBL) and Steel Dynamics Inc (STLD).
The top 10 holdings account for about 8.04% of total assets under management.
Performance and Risk
Year-to-date, the Invesco Russell 1000 Dynamic Multifactor ETF has added about 11.45% so far, and was up about 9.52% over the last 12 months (as of 11/16/2023). OMFL has traded between $42.21 and $50.60 in this past 52-week period.
OMFL has a beta of 1 and standard deviation of 18.46% for the trailing three-year period. With about 728 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco Russell 1000 Dynamic Multifactor ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Growth ETF (VUG) tracks CRSP U.S. Large Cap Growth Index and the Invesco QQQ (QQQ) tracks NASDAQ-100 Index. Vanguard Growth ETF has $97.39 billion in assets, Invesco QQQ has $214.17 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
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 - Large Cap Growth.
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 1000 Dynamic Multifactor ETF (OMFL): ETF Research Reports
Steel Dynamics, Inc. (STLD) : Free Stock Analysis Report
Cardinal Health, Inc. (CAH) : Free Stock Analysis Report
Jabil, Inc. (JBL) : Free Stock Analysis Report
Invesco QQQ (QQQ): ETF Research Reports
Vanguard Growth ETF (VUG): ETF Research Reports
