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 during the year, and in 2021, the fund 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.
OMFL is based on the Russell 1000 Invesco Dynamic Multifactor Index, which is constructed using a rules-based approach that weights large-cap securities included in the Russell 1000 according to economic cycles and market conditions, reflected by expansion, slowdown, contraction, or recovery, according to Invesco.
Constituents in the index are assigned a multi-factor score from one of five investment styles: value, momentum, quality, low volatility, and size. According to Invesco, both the fund and index are reconstituted and rebalanced based on economic indicator signal changes, as frequently as monthly.
OMFL outpaced the Russell 1000 in April, as the ETF gained 2.9% and the benchmark index climbed 1.2% during the month. Year to date, OMFL is up 10.7% and the benchmark Russell 1000 is up 7.5%.
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