Designed to provide broad exposure to the Small Cap Blend segment of the US equity market, the IQ Chaikin U.S. Small Cap ETF (CSML) is a passively managed exchange traded fund launched on 05/16/2017.
The fund is sponsored by Indexiq. It has amassed assets over $277.61 M, making it one of the average sized ETFs attempting to match the Small Cap Blend segment of the US equity market.
Why Small Cap Blend
There's a lot of potential to investing in small cap companies, but with market capitalization below $2 billion, that high potential comes with even higher risk.
Typically holding a combination of both growth and value stocks, blend ETFs also demonstrate qualities seen in value and growth investments.
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 0.35%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.39%.
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 26.50% of the portfolio. Financials and Information Technology round out the top three.
Looking at individual holdings, Sunpower Corp (SPWR) accounts for about 0.75% of total assets, followed by Magnachip Semiconduct (MX) and Vectrus Inc (VEC).
The top 10 holdings account for about 6.58% of total assets under management.
Performance and Risk
CSML seeks to match the performance of the NASDAQ Chaikin Power US Small Cap Index before fees and expenses. The NASDAQ Chaikin Power US Small Cap Index is a rules-based, quantitative index designed to enhance the NASDAQ US 1500 Index, by selecting stocks with the highest Chaikin Power Gauge rating.
The ETF return is roughly 13.05% so far this year and is down about -11.36% in the last one year (as of 07/02/2019). In the past 52-week period, it has traded between $21.19 and $29.65.
The ETF has a beta of 1.26 and standard deviation of 16.47% for the trailing three-year period. With about 218 holdings, it effectively diversifies company-specific risk.
IQ Chaikin U.S. Small Cap 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, CSML is a sufficient 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 iShares Russell 2000 ETF (IWM) and the iShares Core S&P Small-Cap ETF (IJR) track a similar index. While iShares Russell 2000 ETF has $42.36 B in assets, iShares Core S&P Small-Cap ETF has $44.81 B. IWM has an expense ratio of 0.19% and IJR charges 0.07%.
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 .
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report IQ Chaikin U.S. Small Cap ETF (CSML): ETF Research Reports Vectrus, Inc. (VEC): Free Stock Analysis Report iShares Core S&P Small-Cap ETF (IJR): ETF Research Reports iShares Russell 2000 ETF (IWM): ETF Research Reports MagnaChip Semiconductor Corporation (MX): Free Stock Analysis Report SunPower Corporation (SPWR): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research