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Should IQ Chaikin U.S. Small Cap ETF (CSML) Be on Your Investing Radar?

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Zacks Equity Research
·4 min read
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Looking for broad exposure to the Small Cap Blend segment of the US equity market? You should consider the IQ Chaikin U.S. Small Cap ETF (CSML), a passively managed exchange traded fund launched on 05/16/2017.

The fund is sponsored by New York Life Investments. It has amassed assets over $202.83 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

There's a lot of potential to investing in small cap companies, but with market capitalization below $2 billion, that high potential comes with even higher risk.

Blend ETFs are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.

Costs

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

Annual operating expenses for this ETF are 0.35%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.01%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Financials sector--about 19.20% of the portfolio. Industrials and Consumer Discretionary round out the top three.

Looking at individual holdings, Domo Inc - Class B (DOMO) accounts for about 0.68% of total assets, followed by Brinker International Inc (EAT) and Smith & Wesson Brands Inc (SWBI).

The top 10 holdings account for about 4.91% of total assets under management.

Performance and Risk

CSML seeks to match the performance of the NASDAQ Chaikin Power US Small Cap Index before fees and expenses. The NASDAQ Chaikin Power US Small Cap Index is a rules-based, quantitative index designed to enhance the NASDAQ US 1500 Index, by selecting stocks with the highest Chaikin Power Gauge rating.

The ETF has gained about 21.77% so far this year and is up about 120.54% in the last one year (as of 04/02/2021). In the past 52-week period, it has traded between $15.49 and $36.36.

The ETF has a beta of 1.40 and standard deviation of 30.68% for the trailing three-year period. With about 489 holdings, it effectively diversifies company-specific risk.

Alternatives

IQ Chaikin U.S. Small Cap 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, CSML is a good 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 Core S&P SmallCap ETF (IJR) and the iShares Russell 2000 ETF (IWM) track a similar index. While iShares Core S&P SmallCap ETF has $69.33 billion in assets, iShares Russell 2000 ETF has $69.86 billion. IJR has an expense ratio of 0.06% and IWM charges 0.19%.

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.


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Brinker International, Inc. (EAT) : Free Stock Analysis Report
 
iShares Russell 2000 ETF (IWM): ETF Research Reports
 
iShares Core S&P SmallCap ETF (IJR): ETF Research Reports
 
Domo, Inc. (DOMO) : Free Stock Analysis Report
 
Smith & Wesson Brands, Inc. (SWBI) : Free Stock Analysis Report
 
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Zacks Investment Research