The Invesco Russell 1000 Dynamic Multifactor ETF applies a proprietary index strategy to investing in large-cap U.S. companies. Invesco starts with the Russell 1000 index of the largest U.S. companies, then assesses the prevailing economic environment and market conditions. Companies are scored based on the factors that are most relevant given the overall outlook. Invesco looks at economic and market barometers such as consumer sentiment, construction activity, manufacturing gauges and labor market conditions to determine whether the economy is expanding, slowing, contracting or recovering, and then scores stocks accordingly. During recovery or expansion, the fund targets company size and value, while during a slowdown or contraction the fund focuses on stocks with healthier balance sheets and reduced susceptibility to market swings. In both expanding or contracting conditions, the fund also targets momentum stocks. The methodology excludes stocks whose multi-factor score falls below certain relative thresholds. The remaining stocks are weighted based on both the multi-factor score and the company’s weight in the baseline index. Money managers have long recognized that certain factors, when deployed during certain market conditions, consistently reward investors. Factor ETFs have proliferated in recent years and there are many active and passive ETF options that target different factors. Some funds combine factors while others target a single factor. The result of OMFL’s methodology is a portfolio that can diverge significantly from a plain-vanilla Russell 1000 ETF. The industry and sector mix may look different, and OMFL tends to have a larger allocation to mid-cap stocks than some traditional large-cap index funds. OMFL may not own the full roster of companies in the Russell 1000 but the fund still owns a diversified mix of hundreds of U.S. equities. For believers in Invesco’s multi-factor approach, the fund could be a good complement to a core portfolio allocation, and may even replace a traditional large-cap holding like an S&P 500 fund. However, investors should note that the fund fees, while reasonable for a factor strategy, are higher than ultra-low cost options from rival firms. Despite the higher fees, OMFL has had significant periods of outperformance compared with funds pegged to the S&P 500 and Russell 1000 indices. OMFL has also beat some of its factor competitors in the space. Though past performance is no guarantee of future results, that makes the fund a compelling choice, especially for factor adherents. Investors should compare price, performance and portfolio against other large-cap U.S. equity ETFs, both plain-vanilla and factor strategies.