If you're interested in broad exposure to the Small Cap Blend segment of the US equity market, look no further than the iShares U.S. Small-Cap Equity Factor ETF (SMLF), a passively managed exchange traded fund launched on April 28, 2015.
The fund is sponsored by Blackrock. It has amassed assets over $3.25 billion, making it one of the larger 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.
Typically holding a combination of both growth and value stocks, blend ETFs also demonstrate qualities seen in value and growth investments.
Costs
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.
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 1.11%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Industrials sector -- about 20.5% of the portfolio. Financials and Information Technology round out the top three.
Looking at individual holdings, Emcor Group Inc (EME) accounts for about 1.01% of total assets, followed by Sandisk Corp (SNDK) and Blk Csh Fnd Treasury Sl Agency (XTSLA).
Performance and Risk
SMLF seeks to match the performance of the MSCI USA Small Cap Diversified Multiple-Factor Index before fees and expenses. The STOXX U.S. Small-Cap Equity Factor Index (USD) composed of U.S. small-capitalization stocks that have favourable exposure to target style factors subject to constraints.
The ETF return is roughly 3.07% so far this year and was up about 10.16% in the last one year (as of 02/06/2026). In the past 52-week period, it has traded between $54.28 and $80.23.
The ETF has a beta of 1.11 and standard deviation of 19.63% for the trailing three-year period, making it a high risk choice in the space. With about 864 holdings, it effectively diversifies company-specific risk.
Alternatives
iShares U.S. Small-Cap Equity Factor 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, SMLF is a reasonable 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 $73.01 billion in assets, iShares Core S&P Small-Cap ETF has $94.37 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.
Bottom-Line
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also 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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iShares U.S. Small-Cap Equity Factor ETF (SMLF): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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