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Is iShares MSCI Intl SmallCap Multifactor ETF (ISCF) a Strong ETF Right Now?

Smart Beta ETF report for ISCF

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This story originally appeared on Zacks

The iShares MSCI Intl SmallCap Multifactor ETF (ISCF) made its debut on 04/28/2015, and is a smart beta exchange traded fund that provides broad exposure to the Broad Developed World ETFs category of the market.

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What Are Smart Beta ETFs?

Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.

Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.

If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.

This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

Because the fund has amassed over $205.13 million, this makes it one of the average sized ETFs in the Broad Developed World ETFs. ISCF is managed by Blackrock. This particular fund, before fees and expenses, seeks to match the performance of the MSCI World exUSA Small Cap Diversified Multiple-Factor Index.

The MSCI World exUSA Small Cap Diversified Multiple-Factor Index is designed to select equity securities from MSCI World ex USA Small Cap Index that have high exposure to four investment style factors: value, quality, momentum and low size.

Cost & Other Expenses

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for ISCF are 0.40%, which makes it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 2.46%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

When you look at individual holdings, Signify Nv (LIGHT) accounts for about 1.17% of the fund's total assets, followed by Tourmaline Oil Corp (TOU) and Mineral Resources Ltd (MIN).

ISCF's top 10 holdings account for about 9.01% of its total assets under management.

Performance and Risk

The ETF has gained about 10.56% and was up about 22.56% so far this year and in the past one year (as of 10/14/2021), respectively. ISCF has traded between $28.81 and $38.87 during this last 52-week period.

The ETF has a beta of 0.97 and standard deviation of 21.03% for the trailing three-year period, making it a medium risk choice in the space. With about 800 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares MSCI Intl SmallCap Multifactor ETF is a reasonable option for investors seeking to outperform the Broad Developed World ETFs segment of the market. However, there are other ETFs in the space which investors could consider.

Vanguard Total International Stock ETF (VXUS) tracks FTSE Global All Cap ex US Index and the Vanguard FTSE Developed Markets ETF (VEA) tracks FTSE Developed All Cap ex US Index. Vanguard Total International Stock ETF has $49.44 billion in assets, Vanguard FTSE Developed Markets ETF has $102.76 billion. VXUS has an expense ratio of 0.08% and VEA charges 0.05%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Developed World ETFs.

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 Zacks ETF Center.



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iShares MSCI Intl SmallCap Multifactor ETF (ISCF): ETF Research Reports

 

Vanguard FTSE Developed Markets ETF (VEA): ETF Research Reports

 

Vanguard Total International Stock ETF (VXUS): ETF Research Reports

 

MFS Intermediate Income Trust (MIN): ETF Research Reports

 

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