Should iShares U.S. Small-Cap Equity Factor ETF (SMLF) Be on Your Investing Radar?

Launched on April 28, 2015, the iShares U.S. Small-Cap Equity Factor ETF (SMLF) is a passively managed exchange traded fund designed to provide a broad exposure to the Small Cap Blend segment of the US equity market.

The fund is sponsored by Blackrock. It has amassed assets over $3.43 billion, making it one of the larger ETFs attempting to match the Small Cap Blend segment of the US equity market.

Why Small Cap Blend

With more potential comes more risk, and small cap companies, with market capitalization below $2 billion, epitomizes this way of thinking.

Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.

Costs

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.15%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 1.12%.

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 Industrials sector -- about 20.1% of the portfolio. Information Technology and Financials round out the top three.

Looking at individual holdings, Sandisk Corp (SNDK) accounts for about 1.55% of total assets, followed by Emcor Group Inc (EME) and Comfort Systems Usa Inc (FIX).

Performance and Risk

SMLF seeks to match the performance of the MSCI USA Small Cap Diversified Multiple-Factor Index before fees and expenses. The STOXX U.S. Small-Cap Equity Factor Index (USD) composed of U.S. small-capitalization stocks that have favourable exposure to target style factors subject to constraints.

The ETF has added roughly 5.21% so far this year and is up about 46.41% in the last one year (as of 04/09/2026). In the past 52-week period, it has traded between $56.86 and $80.23.

The ETF has a beta of 1.09 and standard deviation of 19.59% for the trailing three-year period, making it a high risk choice in the space. With about 860 holdings, it effectively diversifies company-specific risk.

Alternatives

iShares U.S. Small-Cap Equity Factor 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, SMLF is a good option for those seeking exposure to the Style Box - Small Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.

The Vanguard Small-Cap Index Fund ETF Shares (VB) and the iShares Core S&P Small-Cap ETF (IJR) track a similar index. While Vanguard Small-Cap Index Fund ETF Shares has $73.71 billion in assets, iShares Core S&P Small-Cap ETF has $96.30 billion. VB has an expense ratio of 0.03% and IJR charges 0.06%.

Bottom-Line

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

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 Zacks ETF Center.

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iShares U.S. Small-Cap Equity Factor ETF (SMLF): ETF Research Reports

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

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