Zacks Small/Mid Cap ETF (SMIZ) seeks to track an index of small and mid-capitalization U.S. companies selected using Zacks' proprietary research methodology. This equity ETF provides exposure to smaller growth-oriented companies that typically have market capitalizations between $300 million and $10 billion.
How It Works
SMIZ uses Zacks' quantitative screening process to identify small and mid-cap stocks with favorable earnings estimate revisions, strong momentum characteristics, and attractive valuation metrics. The fund employs an active index methodology that rebalances quarterly based on updated Zacks Rank scores and fundamental analysis. Holdings are weighted using a modified market-cap approach that considers both size and quality factors, typically maintaining 100-200 positions across various sectors.
Key Features
- Leverages Zacks' 50+ year track record in earnings estimate analysis and proprietary stock ranking system for security selection
- Zero expense ratio structure makes it one of the most cost-effective ways to access small/mid-cap equity exposure
- Recently launched in October 2023, offering investors access to a refined small/mid-cap strategy with institutional backing
Risks
- This ETF can lose value significantly during market downturns as small/mid-cap stocks typically decline 40-50% more than large-caps in bear markets
- Limited operating history since 2023 inception means no proven track record through various market cycles or economic conditions
- Small and mid-cap companies face higher business risk, liquidity constraints, and earnings volatility compared to established large-cap firms
Who Should Own This
Best suited for growth-oriented investors with 5+ year time horizons and medium-to-high risk tolerance seeking small/mid-cap exposure as a satellite holding (10-20% of equity allocation). Appropriate for investors who want active factor-based selection within the small/mid-cap space rather than broad market-cap weighted exposure.