Zacks Investment Management, a subsidiary of Zacks Investment Research with $15.1 billion in assets under management, announced the launch of its second actively managed ETF, the Zacks Small and Mid Cap ETF (NYSE Arca: SMIZ) on Tuesday. The new fund aims to generate positive risk-adjusted returns by investing in small and mid-cap companies.
Mitch Zacks, President of Zacks Investment Management, stated that the current market climate presents both challenges and opportunities for investors. According to him, SMIZ is their response to an increasingly complex investment landscape, providing a meticulously researched solution that aims to outperform a 50/50 blend of the Russell 2000 Index and Russell Mid Cap Index.
The fund is constructed utilizing comprehensive quantitative screening and qualitative analysis. This results in a portfolio of approximately 150-250 companies that best meet the criteria for providing risk-adjusted returns and diversification benefits to the Russell 2500 Index.
Zacks' proprietary Multi-Factor Alpha Model helps the portfolio manager select stocks from the constituents of the Russell Mid Cap Index and Russell 2000 Index universe. The factors focus on the percentage of earnings estimate revisions that are revised upward and the size of the earnings estimate revisions. The model also considers where the most accurate or recent earnings estimates are in relation to consensus and the magnitude and frequency of earnings surprises. Following this, Zacks determines the allocation between the small and mid-cap asset classes.
Salvatore Esposito, Head of ETF Products at Zacks Investment Management, said that SMIZ is a testament to its commitment to creating innovative, research-driven investment solutions. He added that their proprietary methodology allows them to offer investors access to products built on data, not feelings.
SMIZ seeks to combine the strengths of two of the firm's existing small- and mid-cap separately managed accounts (SMAs). This strategic blend allows investors to enjoy the combined benefits of both asset classes in a tax-efficient structure. The launch of SMIZ follows that of Zacks Investment Management's first ETF, the Zacks Earnings Consistent Portfolio ETF (CBOE: ZECP), which includes companies with a track record of navigating through recessionary periods with little to minimal impact on aggregate earnings growth relative to the overall equity market.
Investing in SMIZ involves risk. As an ETF, the fund may trade at a premium or discount to NAV. The Fund is subject to management risk because it is an actively managed portfolio. The Advisor's judgments about the attractiveness, value, and stability of particular stocks in which the Fund invests may prove to be incorrect, and there is no guarantee that the Advisor's judgment will produce the desired results. Equity securities are subject to changes in value, and their values may be more volatile than those of other asset classes.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.