The Invesco Russell 1000 Dynamic Multifactor ETF (OMFL) has seen a dramatic surge in investor interest in recent weeks.
Investors have recently looked for an alternative to market cap weight strategies believing that market breadth will expand beyond a handful of mega-cap growth stocks, according to Todd Rosenbluth, head of research at VettaFi. Invesco’s multi-factor ETF is unique in that it shifts from risk off to risk on factor exposure and vice versa based on the market environment, he added.
OMFL has seen $1 billion in net flows since February 1, a sharp increase for the $3.5 billion fund. In 2022, the fund took in $497 million in net flows. Meanwhile, in 2021, it accreted $404 million in net flows.
“Given the shifting macroeconomic and fundamental environment, OMFL provides a unique dynamic approach to factor investing in a low-cost tax efficient manner relative to active mutual funds,” Rosenbluth said.
What Does Multi-Factor ETF OMFL Hold?
OMFL tracks the Russell 1000 Invesco Dynamic Multifactor Index. This benchmark weights large-caps in the Russell 1000, according to economic cycles and market conditions. These can reflect expansion, slowdown, contraction, or recovery, according to Invesco.
The methodology assigns index constituents a multi-factor score from one of five investment styles: value, momentum, quality, low volatility, and size. Invesco reconstitutes and rebalances both the fund and index based on economic indicator signal changes. This may happen as frequently as monthly.
OMFL outpaced the Russell 1000 in April. The ETF gained 2.9%, while the benchmark index climbed 1.2% during the month. Year to date, OMFL is up 10.7%, while the benchmark Russell 1000 is up 7.5%.
Other multi-factor ETFs offered by Invesco include the Invesco Russell 2000 Dynamic Multifactor ETF (OMFS) and the Invesco International Developed Dynamic Multifactor ETF (IMFL).
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