Launched on 04/28/2015, the iShares U.S. Small-Cap Equity Factor ETF (SMLF) is a smart beta exchange traded fund offering broad exposure to the Style Box - Small Cap Blend category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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
The fund is managed by Blackrock. SMLF has been able to amass assets over $4.2 billion, making it one of the larger ETFs in the Style Box - Small Cap Blend. 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.
Cost & Other Expenses
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 1.02%.
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.
For SMLF, it has heaviest allocation in the Industrials sector --about 18.5% of the portfolio --while Information Technology and Healthcare round out the top three.
Looking at individual holdings, Emcor Group Inc (EME) accounts for about 0.98% of total assets, followed by Nvent Electric Plc (NVT) and Flex Ltd (FLEX).
Its top 10 holdings account for approximately 7.9% of SMLF's total assets under management.
Performance and Risk
The ETF has added about 16.2% so far this year and is up about 19.75% in the last one year (as of 09/02/2026). In the past 52-week period, it has traded between $70.03 and $90.63
The fund has a beta of 1.08 and standard deviation of 19.51% for the trailing three-year period, which makes SMLF a high risk choice in this particular space. With about 928 holdings, it effectively diversifies company-specific risk .
Alternatives
iShares U.S. Small-Cap Equity Factor 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 Morningstar 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 Morningstar Small-Cap ETF has $79.92 billion in assets, iShares Core S&P Small-Cap ETF has $107.89 billion. VB has an expense ratio of 0.03% 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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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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