The Inspire Small/Mid Cap ETF (ISMD) was launched on 02/28/2017, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - All Cap Blend category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Managed by Inspire, ISMD has amassed assets over $212.52 million, making it one of the average sized ETFs in the Style Box - All Cap Blend. ISMD seeks to match the performance of the Inspire Small/Mid Cap Impact Equal Weight Index before fees and expenses.
The Inspire Small/Mid Cap Impact Equal Weight Index tracks the stock performance of 500 of the most inspiring small and mid-cap companies in the U.S.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for ISMD are 0.59%, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.18%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Financials sector - about 19.80% of the portfolio. Industrials and Information Technology round out the top three.
Looking at individual holdings, Bbh Sweep Vehicle (BBHETFMM) accounts for about 0.31% of total assets, followed by Wolfspeed Inc (WOLF) and Cantaloupe Inc (CTLP).
Its top 10 holdings account for approximately 2.59% of ISMD's total assets under management.
Performance and Risk
The ETF has added roughly 17.79% so far this year and is up about 26.80% in the last one year (as of 12/05/2024). In the past 52-week period, it has traded between $31.93 and $40.75.
The ETF has a beta of 1.10 and standard deviation of 21.27% for the trailing three-year period. With about 499 holdings, it effectively diversifies company-specific risk.
Alternatives
Inspire Small/Mid Cap ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares ESG Aware MSCI USA ETF (ESGU) tracks MSCI USA ESG Focus Index and the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) tracks ----------------------------------------. IShares ESG Aware MSCI USA ETF has $14.60 billion in assets, JPMorgan Nasdaq Equity Premium Income ETF has $19.78 billion. ESGU has an expense ratio of 0.15% and JEPQ charges 0.35%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - All Cap Blend.
Bottom Line
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.
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Get it free >>Inspire Small/Mid Cap ETF (ISMD): ETF Research Reports
Wolfspeed (WOLF) : Free Stock Analysis Report
iShares ESG Aware MSCI USA ETF (ESGU): ETF Research Reports
Cantaloupe, Inc. (CTLP) : Free Stock Analysis Report
JPMorgan Nasdaq Equity Premium Income ETF (JEPQ): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
