Should iShares US SmallCap Equity Fac (SMLF) Be on Your Investing Radar?
The iShares US SmallCap Equity Fac (SMLF) was launched on 04/28/2015, and is a passively managed exchange traded fund designed to offer broad exposure to the Small Cap Blend segment of the US equity market.
The fund is sponsored by Blackrock. It has amassed assets over $862.35 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
With more potential comes more risk, and small cap companies, with market capitalization below $2 billion, epitomizes this way of thinking.
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 0.15%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 1.42%.
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.
This ETF has heaviest allocation to the Industrials sector--about 17.50% 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) and Fair Isaac Corp (FICO).
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 roughly 1.90% so far this year and is up about 0.34% in the last one year (as of 05/02/2023). 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 23.36% 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) and the iShares Core S&P Small-Cap ETF (IJR) track a similar index. While iShares Russell 2000 ETF has $49.31 billion in assets, iShares Core S&P Small-Cap ETF has $64.92 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.
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iShares US SmallCap Equity Fac (SMLF): ETF Research Reports
First Industrial Realty Trust, Inc. (FR) : Free Stock Analysis Report
Fair Isaac Corporation (FICO) : Free Stock Analysis Report
iShares Russell 2000 ETF (IWM): ETF Research Reports
iShares Core S&P Small-Cap ETF (IJR): ETF Research Reports
