SMLF Profile
The iShares MSCI USA Small-Cap Multifactor ETF is designed to offer targeted exposure to small-cap U.S. equities with a focus on multiple investment style factors. The fund aims to invest at least 80% of its assets in securities that are part of its underlying index or have economic characteristics substantially similar to those securities. This includes direct investments in the component stocks of the index and indirect exposure through financial instruments such as futures, options, and swaps. The remaining 20% of the fund’s assets may be allocated to cash and cash equivalents to manage liquidity and investment flexibility.
The ETF tracks an index that is a subset of the MSCI USA Small Cap Index, specifically selecting stocks with significant exposure to four key investment factors: value, quality, momentum, and low size. These factors are chosen to enhance potential returns by identifying stocks that are undervalued, exhibit strong financial health, show positive momentum, and are smaller in market capitalization relative to their peers. The index aims to balance these factors while maintaining a risk profile similar to the broader MSCI USA Small Cap Index, providing a diversified exposure to small-cap stocks with multifactor characteristics.
The fund’s approach is grounded in a multifactor investment strategy that seeks to capitalize on various sources of potential return and risk management. By focusing on value and quality factors, the ETF targets companies that are perceived as undervalued and financially robust. The momentum factor identifies stocks with strong recent performance trends, while the low size factor emphasizes smaller companies that might offer higher growth potential. This diversified approach aims to achieve superior risk-adjusted returns compared to a market-cap-weighted index.
The iShares MSCI USA Small-Cap Multifactor ETF is actively managed to ensure that its investments align with the underlying index's multifactor criteria, providing investors with targeted exposure to small-cap U.S. equities that meet specific investment style characteristics. This strategic focus aims to deliver enhanced returns and risk management by leveraging the benefits of the selected investment factors. The fund offers investors a sophisticated tool for gaining exposure to small-cap stocks with a proven multifactor investment strategy.
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