Launched on November 8, 2017, the Invesco Russell 1000 Dynamic Multifactor ETF (OMFL) offers investors a strategic approach to the Large Cap Growth market. This smart beta fund aims to outperform traditional ETFs by using a unique selection process.
Understanding Smart Beta ETFs
Traditionally, the ETF market has been dominated by products based on market cap weighted indexes, reflecting specific segments or the overall market. These indexes provide a low-cost and transparent way to replicate market returns, appealing to investors who trust in market efficiency.
However, some investors believe they can beat the market with careful stock selection. These investors often turn to smart beta funds, which use strategies that do not rely solely on market capitalization. By focusing on fundamental characteristics and performance metrics, smart beta ETFs aim to identify stocks with superior risk-return profiles. Some common methods include equal-weighting, fundamental weighting, and volatility or momentum-based strategies; yet, not all can deliver better returns.
About the Fund and Its Management
Invesco manages OMFL, and the fund has grown to over $5.32 billion in assets, making it a significant player in the Large Cap Growth category. Before fees, OMFL seeks to match the performance of the Russell 1000 Invesco Dynamic Multifactor Index, which selects stocks from the 1,000 largest companies in the U.S. based on a systematic methodology.
Assessing Costs and Expenses
Expense ratios are crucial when evaluating an ETF’s overall returns. Funds with lower fees often outperform their higher-cost counterparts over time, assuming other factors are equal. OMFL charges an annual operating expense of 0.29%, aligning it with most peers. Additionally, it offers a trailing 12-month dividend yield of 1.28%.
Sector Allocation and Key Holdings
Before investing in an ETF, it’s essential to review its holdings, despite the benefits of diversification. OMFL reveals a notable allocation of approximately 26% in the Information Technology sector, with Financials and Industrials following closely behind.
In terms of individual stocks, Berkshire Hathaway Inc (BRK/B) comprises about 5.22% of the fund’s assets, with Nvidia Corp (NVDA) and Meta Platforms Inc (META) also among its top holdings. Collectively, the top 10 holdings make up roughly 42.67% of OMFL’s total assets under management.
Performance Metrics and Associated Risks
As of November 28, 2024, OMFL has achieved returns of about 8.61% and 17.04% for the past year. Throughout the last 52 weeks, the ETF’s price fluctuated between $47.65 and $55.53. With a beta of 1.01 and a standard deviation of 17.34% over three years, the fund effectively mitigates company-specific risks through its 251 holdings.
Exploring Alternatives
For investors aiming to exceed the returns of the Large Cap Growth segment, the Invesco Russell 1000 Dynamic Multifactor ETF is a solid option. Yet, several alternatives are available.
Consider, for example, the Vanguard Growth ETF (VUG), which tracks the CRSP U.S. Large Cap Growth Index and holds assets worth $150.29 billion. The Invesco QQQ (QQQ), tracking the NASDAQ-100 Index, boasts assets of $310.11 billion. VUG comes with an expense ratio of 0.04%, while QQQ charges 0.20%. For those seeking lower-cost and lower-risk alternatives, traditional market cap-weighted ETFs can also be considered.
Conclusion
To dive deeper into this ETF and others, investors should seek products that align with their financial goals and stay updated on the evolving ETF landscape, which can be explored at Zacks ETF Center.
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Invesco Russell 1000 Dynamic Multifactor ETF (OMFL): ETF Research Reports
NVIDIA Corporation (NVDA): Free Stock Analysis Report
Invesco QQQ (QQQ): ETF Research Reports
Vanguard Growth ETF (VUG): ETF Research Reports
Meta Platforms, Inc. (META): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
