Investors are increasingly looking to the Invesco Russell 1000 Dynamic Multifactor ETF (OMFL) and the Invesco S&P 500 Low Volatility ETF (SPLV) as smart beta ETFs continue to play a significant role in portfolios.
OMFL and SPLV are the top two funds by four-week flows across Invesco’s range of ETFs. OMFL has taken in $603 million in four-week net flows, bringing its year-to-date net flows to $1.1 billion. SPLV has seen $343 million in four-week net flows.
“The U.S. equity market has been recently driven by a handful of stocks, which has caused some advisors to look for alternatively weighted ETFs that can help protect more against potential weakness but still participate in the upside,” Todd Rosenbluth, head of research at VettaFi, said.
Under the Hood of OMFL and SPLV
OMFL is based on the Russell 1000 Invesco Dynamic Multifactor Index. The index weights large-cap securities included in the Russell 1000 according to economic cycles and market conditions. The market conditions and economic cycles include expansion, slowdown, contraction, or recovery.
Constituents in OMFL’s underlying index receive a multi-factor score from either value, momentum, quality, low volatility, and size. The fund reconstitutes as frequently as monthly.
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).
SPLV’s recent surge in flows has partially offset outflows seen earlier in the year. The fund has seen $460 million in net outflows year to date compared to $2.6 billion in inflows in 2022. SPLV saw flows reverse during the first three months of 2023 as investors looked to growthier segments of the market.
SPLV is based on the S&P 500 Low Volatility Index, which consists of the 100 securities from the S&P 500 Index with the lowest realized volatility over the past 12 months.
In addition to SPLV, Invesco’s low volatility suite comprises the Invesco S&P MidCap Low Volatility ETF (XMLV), the Invesco S&P SmallCap Low Volatility ETF (XSLV), the Invesco S&P International Developed Low Volatility ETF (IDLV), and the Invesco S&P Emerging Markets Low Volatility ETF (EELV).
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