Making its debut on 11/08/2017, smart beta exchange traded fund Invesco Russell 2000 Dynamic Multifactor ETF (OMFS) provides investors broad exposure to the Style Box - Small Cap Blend category of the market.

What Are Smart Beta ETFs?

The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.

Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.

On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.

Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.

The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.

Fund Sponsor & Index

OMFS is managed by Invesco, and this fund has amassed over $281.5 million, which makes it one of the average sized ETFs in the Style Box - Small Cap Blend. Before fees and expenses, this particular fund seeks to match the performance of the RUSSELL 2000 INVESCO DYNAMIC MLTIFCTR ID.

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.

Cost & Other Expenses

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.

With on par with most peer products in the space, this ETF has annual operating expenses of 0.39%.

OMFS's 12-month trailing dividend yield is 1.09%.

Sector Exposure and Top Holdings

Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.

Representing 26.7% of the portfolio, the fund has heaviest allocation to the Financials sector; Industrials and Healthcare round out the top three.

When you look at individual holdings, Indivior Pharmaceuticals Inc (INDV) accounts for about 1.94% of the fund's total assets, followed by Sterling Infrastructure Inc (STRL) and Nextpower Inc (NXT).

Its top 10 holdings account for approximately 13.69% of OMFS's total assets under management.

Performance and Risk

The ETF has gained about 18.39% and is up roughly 29.75% so far this year and in the past one year (as of 07/27/2026), respectively. OMFS has traded between $39.64 and $53.38 during this last 52-week period.

OMFS has a beta of 0.96 and standard deviation of 20.00% for the trailing three-year period. With about 1104 holdings, it effectively diversifies company-specific risk .

Alternatives

Invesco Russell 2000 Dynamic Multifactor 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.

iShares Russell 2000 ETF (IWM) tracks Russell 2000 Index and the iShares Core S&P Small-Cap ETF (IJR) tracks S&P SmallCap 600 Index. iShares Russell 2000 ETF has $80.18 billion in assets, iShares Core S&P Small-Cap ETF has $109.09 billion. IWM has an expense ratio of 0.19% 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

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Invesco Russell 2000 Dynamic Multifactor ETF (OMFS): ETF Research Reports

This article originally published on Zacks Investment Research (zacks.com).

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