Should Invesco Russell 1000 Dynamic Multifactor ETF Be on Your Investing Radar?

The Invesco Russell 1000 Dynamic Multifactor ETF OMFL was launched on 11/08/2017, and is a passively managed exchange traded fund designed to offer broad exposure to the Large Cap Growth segment of the US equity market.

The fund is sponsored by Invesco. It has amassed assets over $5.28 billion, making it one of the larger ETFs attempting to match the Large Cap Growth segment of the US equity market.

Why Large Cap Growth

Companies that find themselves in the large cap category typically have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.

Qualities of growth stocks include faster growth rates compared to the broader market, as well as higher valuations and higher than average sales and earnings growth rates. Something to keep in mind is the higher level of volatility that is affiliated with growth stocks. When you consider growth versus value, growth stocks are usually the clear winner in strong bull markets but tend to fall flat in nearly all other environments.

Costs

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.

Annual operating expenses for this ETF are 0.29%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.57%.

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.

This ETF has heaviest allocation to the Information Technology sector--about 26.30% of the portfolio. Financials and Healthcare round out the top three.

Looking at individual holdings, Berkshire Hathaway Inc accounts for about 5.30% of total assets, followed by Costco Wholesale Corp COST and Meta Platforms Inc.

The top 10 holdings account for about 41.11% of total assets under management.

Performance and Risk

OMFL seeks to match the performance of the RUSSELL 1000 INVESCO DYNAMIC MLTIFCTR ID before fees and expenses. The Russell 1000 Invesco Dynamic Multifactor Index is constructed using a rules-based methodology by selecting equity securities from the Russell 1000 Index, which measures the performance of the 1,000 largest-capitalization companies in the United States.

The ETF has added about 0.46% so far this year and is up about 5.06% in the last one year (as of 09/04/2024). In the past 52-week period, it has traded between $43.21 and $55.23.

The ETF has a beta of 1.01 and standard deviation of 17.55% for the trailing three-year period. With about 249 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco Russell 1000 Dynamic Multifactor ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, OMFL is a sufficient option for those seeking exposure to the Style Box - Large Cap Growth area of the market. Investors might also want to consider some other ETF options in the space.

The Vanguard Growth ETF VUG and the Invesco QQQ QQQ track a similar index. While Vanguard Growth ETF has $131.14 billion in assets, Invesco QQQ has $279.37 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.

Bottom-Line

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

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