Should Invesco Russell 2000 Dynamic Multifactor ETF (OMFS) Be on Your Investing Radar?

Designed to provide broad exposure to the Small Cap Blend segment of the US equity market, the Invesco Russell 2000 Dynamic Multifactor ETF (OMFS) is a passively managed exchange traded fund launched on 11/08/2017.

The fund is sponsored by Invesco. It has amassed assets over $215.64 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

Sitting at a market capitalization below $2 billion, small cap companies tend to be high-potential stocks compared to its large and mid cap counterparts, but come with higher risk.

Typically holding a combination of both growth and value stocks, blend ETFs also demonstrate qualities seen in value and growth investments.

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 0.39%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.69%.

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.

This ETF has heaviest allocation to the Financials sector--about 24.70% of the portfolio. Industrials and Information Technology round out the top three.

Looking at individual holdings, Sprouts Farmers Market Inc (SFM) accounts for about 3.21% of total assets, followed by Exlservice Holdings Inc (EXLS) and Commvault Systems Inc (CVLT).

The top 10 holdings account for about 13.56% of total assets under management.

Performance and Risk

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.

The ETF has lost about -9.15% so far this year and it's up approximately 2.66% in the last one year (as of 04/15/2025). In the past 52-week period, it has traded between $33.88 and $43.90.

The ETF has a beta of 1.05 and standard deviation of 22.50% for the trailing three-year period. With about 654 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco Russell 2000 Dynamic Multifactor ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, OMFS is an outstanding option for investors seeking exposure to the Style Box - Small Cap Blend segment of the market. There are other additional ETFs in the space that investors could consider as well.

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 $59.68 billion in assets, iShares Core S&P Small-Cap ETF has $72.09 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.

Bottom-Line

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

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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This article originally published on Zacks Investment Research (zacks.com).

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