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

Looking for broad exposure to the Small Cap Blend segment of the US equity market? You should consider the Invesco Russell 2000 Dynamic Multifactor ETF (OMFS), a passively managed exchange traded fund launched on 11/08/2017.

The fund is sponsored by Invesco. It has amassed assets over $232.54 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

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

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 1.55%.

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 27.40% of the portfolio. Industrials and Information Technology round out the top three.

Looking at individual holdings, Sprouts Farmers Market Inc (SFM) accounts for about 3.87% of total assets, followed by Commvault Systems Inc (CVLT) and Exlservice Holdings Inc (EXLS).

The top 10 holdings account for about 14.82% 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 -0.96% so far this year and was up about 11.28% in the last one year (as of 06/20/2025). In the past 52-week period, it has traded between $33.88 and $43.90.

The ETF has a beta of 1.06 and standard deviation of 21.20% for the trailing three-year period. With about 650 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 excellent 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 $62.74 billion in assets, iShares Core S&P Small-Cap ETF has $77.17 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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This article originally published on Zacks Investment Research (zacks.com).

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