Invesco’s Dynamic Multifactor ETF Sees Strong Flows in 2023

Invesco’s large-cap dynamic multifactor ETF has garnered significant investor attention in 2023.

The Invesco Russell 1000 Dynamic Multifactor ETF (OMFL) has seen consistently strong inflows year to date, reaching $2.6 billion in net flows in 2023 as of December 11.

OMFL has $5.2 billion in assets under management. The multifactor ETF has seen considerably stronger flows in 2023 than in recent years past. In 2022, the fund took in $497 million in net flows. Meanwhile, in 2021, it accreted $404 million in net flows.

The large-cap multifactor ETF has gained popularity as investors have looked for an alternative to market cap weight strategies, believing market breadth will expand beyond a handful of mega-cap growth stocks.

Invesco’s multifactor ETF is unique in that it shifts from risk-off to risk-on factor exposure and vice versa based on the market environment. This strategy is particularly attractive given the current shifting macroeconomic and fundamental environment.

Under the Hood of Invesco’s Multifactor ETF

OMFL tracks the Russell 1000 Invesco Dynamic Multifactor Index. This benchmark includes large-caps in the Russell 1000. Economic cycles and market conditions determine the weighting of the constituents. These can reflect expansion, slowdown, contraction, or recovery, according to Invesco.

The methodology assigns index constituents a multifactor 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.

Other multifactor ETFs in Invesco’s suite of ETFs include the Invesco Russell 2000 Dynamic Multifactor ETF (OMFS) and the Invesco International Developed Dynamic Multifactor ETF (IMFL).

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