A smart beta exchange traded fund, the Invesco Russell 2000 Dynamic Multifactor ETF (OMFS) debuted on 11/08/2017, and offers broad exposure to the Style Box - Small Cap Blend category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Managed by Invesco, OMFS has amassed assets over $256.14 million, making it one of the average sized ETFs in the Style Box - Small Cap Blend. OMFS 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.39% for OMFS, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.19%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 27.3% of the portfolio, the fund has heaviest allocation to the Financials sector; Industrials and Information Technology round out the top three.
When you look at individual holdings, Hims & Hers Health Inc (HIMS) accounts for about 0.78% of the fund's total assets, followed by Interdigital Inc (IDCC) and Sterling Infrastructure Inc (STRL).
The top 10 holdings account for about 6.03% of total assets under management.
Performance and Risk
The ETF has added roughly 11.26% so far this year and was up about 15.86% in the last one year (as of 09/16/2025). In the past 52-week period, it has traded between $33.88 and $44.07
OMFS has a beta of 1.07 and standard deviation of 20.95% for the trailing three-year period. With about 1454 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.
Vanguard Small-Cap ETF (VB) tracks CRSP US Small Cap Index and the iShares Core S&P Small-Cap ETF (IJR) tracks S&P SmallCap 600 Index. Vanguard Small-Cap ETF has $67.6 billion in assets, iShares Core S&P Small-Cap ETF has $85.58 billion. VB has an expense ratio of 0.05% and IJR changes 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 ReportsThis article originally published on Zacks Investment Research (zacks.com).
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