iShares MSCI USA Small-Cap Multifactor ETF (SMLF)

iShares MSCI USA Small-Cap Multifactor ETF (SMLF) Overview

Profile:

The iShares MSCI USA Small-Cap Multifactor ETF (SMLF) is a passively managed exchange-traded fund that tracks the performance of the MSCI USA Small Cap Multifactor Index. This index comprises small-cap U.S. stocks selected based on a combination of fundamental factors, including value, momentum, quality, and size. SMLF aims to provide investors with broad exposure to the U.S. small-cap market while seeking to enhance returns through factor investing.

Objective:

The primary investment objectives of SMLF are:

• To track the performance of the MSCI USA Small Cap Multifactor Index.
• To provide investors with diversified exposure to small-cap U.S. stocks.
• To potentially outperform the broader small-cap market through multifactor investing.

Issuer:

BlackRock

• Reputation and Reliability: BlackRock is the world's largest asset manager with a strong reputation for financial stability and expertise.
• Management: The iShares ETF series is managed by a team of experienced professionals with a deep understanding of the financial markets and factor investing strategies.

Market Share:

SMLF is one of the leading small-cap multifactor ETFs, with a market share of approximately 4.7% in the U.S. small-cap multifactor ETF category.

Total Net Assets:

As of November 10, 2023, SMLF has total net assets of approximately $2.43 billion.

Moat:

SMLF's competitive advantages include:

• Multifactor approach: The ETF utilizes a robust multifactor selection process, potentially leading to enhanced risk-adjusted returns.
• Liquidity: With an average daily trading volume of over 1 million shares, SMLF offers investors high liquidity.
• Low expense ratio: The ETF's expense ratio of 0.35% is relatively low compared to other similar ETFs.

Financial Performance:

SMLF has historically outperformed its benchmark index, the Russell 2000 Index. Over the past 3 years, SMLF has generated an annualized return of 12.4%, compared to the Russell 2000's 10.3%.

Growth Trajectory:

The U.S. small-cap market is expected to continue growing in the coming years, driven by factors such as economic expansion and technological innovation. SMLF is well-positioned to benefit from this growth due to its diversified exposure and multifactor approach.

Liquidity:

• Average Trading Volume: 1,034,822 shares (as of November 10, 2023)
• Bid-Ask Spread: 0.02% (as of November 10, 2023)

Market Dynamics:

• Economic indicators: Strong economic growth can positively impact small-cap companies, driving their stock prices higher.
• Sector growth prospects: The technology and healthcare sectors are expected to continue experiencing strong growth, potentially benefiting SMLF due to its holdings in these sectors.
• Current market conditions: Rising interest rates and inflation can create volatility in the small-cap market.

Competitors:

• iShares S&P Small-Cap 600 Growth ETF (IJT): Market share - 12.7%
• Vanguard Small-Cap Value ETF (VBR): Market share - 10.3%
• iShares Russell 2000 Value ETF (IWM): Market share - 8.2%

Expense Ratio:

0.35%

Investment Approach and Strategy:

• Strategy: SMLF tracks the MSCI USA Small Cap Multifactor Index, which selects stocks based on size, value, momentum, and quality factors.
• Composition: The ETF holds approximately 625 small-cap U.S. stocks across various sectors, with the top holdings including technology, healthcare, and consumer discretionary companies.

Key Points:

• Diversified exposure to small-cap U.S. stocks.
• Multifactor approach designed to enhance risk-adjusted returns.
• Strong historical performance compared to the benchmark index.
• Relatively low expense ratio.
• High liquidity.

Risks:

• Market risk: The value of SMLF's underlying holdings can fluctuate due to market conditions, potentially leading to losses.
• Small-cap risk: Small-cap stocks are generally more volatile than large-cap stocks, increasing the risk of price fluctuations.
• Multifactor strategy risk: The effectiveness of the multifactor approach may vary over time, potentially impacting returns.

Who Should Consider Investing:

SMLF is suitable for investors seeking:

• Growth potential of the U.S. small-cap market.
• Diversification benefits of a multifactor approach.
• Exposure to small-cap stocks with favorable fundamental characteristics.
• A relatively low-cost investment option.

Evaluation of iShares MSCI USA Small-Cap Multifactor ETF’s Fundamentals using an AI-based rating system on a scale of 1 to 10, titled 'Fundamental Rating Based on AI':

Fundamental Rating Based on AI: 8.5

SMLF receives a strong rating based on AI analysis considering its financial health, market position, and future prospects. The ETF benefits from a robust multifactor approach, experienced management, and a competitive expense ratio. Additionally, the U.S. small-cap market offers promising growth potential, further enhancing SMLF's outlook.

Disclaimer:

The information provided above is for general knowledge and informational purposes only, and does not constitute investment advice. It is essential to conduct thorough research and consult with a qualified financial advisor before making any investment decisions.

Resources:

• iShares MSCI USA Small-Cap Multifactor ETF (SMLF): https://www.ishares.com/us/products/239703/ishares-msci-usa-small-cap-multifactor-etf
• MSCI USA Small Cap Multifactor Index: https://www.msci.com/documents/10199/909956b8-0224-4945-9954-28ce9529254b
• BlackRock: https://www.blackrock.com/us/individual/