Built on the constituents of the Russell 1000 Index, this U.S. large-cap ETF dynamically adjusts the weights of factors (value, momentum, quality, and volatility) that are favorable in each phase of the economic cycle: recovery, expansion, slowdown, and contraction.

It suits investors who want a strategy that responds to the economic cycle, rather than a plain market-cap-weighted large-cap ETF.

It is a passive (index-tracking) ETF managed by Invesco.

Under the index methodology calculated by FTSE Russell, the economic cycle phase is identified, and stock weights are dynamically allocated to the factor mix (value, momentum, quality, volatility, and size) that is generally considered favorable in each phase. As a result, its sector and weighting composition can differ from that of a plain market-cap-weighted large-cap index.

• Automatic factor rotation based on the economic cycle phase
• A relatively larger mid-cap weighting than a typical large-cap index

Assets under management (AUM) stand at $4.8B, and the total expense ratio is 0.29% per year.

Its fees and management approach often differ from those of the similar factor and strategy ETFs shown alongside it in the table.

Because factor weights are periodically readjusted based on the identified economic cycle phase, the fund has tended to show gaps in relative performance versus a standard large-cap index around each phase transition.

Interest in factor rotation strategies has continued, and fund flows have fluctuated with changes in the market environment and the timing of economic cycle transitions. The fund is classified in a category that maintains a large asset base.

Automatic factor rotation by economic cycle phase is its strength, but a drawback is that, by the nature of the strategy, it may lag its benchmark in certain phases.

RWL, SPYX, SNPE, QVML, and others shown alongside it in the table are strategy ETFs in the same large-cap category that select stocks through factor or screening methods, which differs from the phase-based factor rotation approach. In addition, comparing IWB, which tracks the same Russell 1000 with simple market-cap weighting, along with SPHQ (quality) and USMV (low volatility), representative factor ETFs based on the S&P 500, can help you compare differences in factor exposure.

Here are the points to review before investing in OMFL. Given the nature of a factor rotation strategy, you need to check fees, rebalancing, and benchmark divergence from a different perspective than for a typical large-cap ETF.

Errors in identifying the economic cycle phase and performance divergence from the benchmark are the key risks. In phases where factor rotation runs counter to market movements, short-term relative underperformance can occur.

It is a suitable choice for investors who want a factor strategy that responds to the economic cycle rather than simple market-cap weighting. If you only want to track the benchmark, a plain Russell 1000 ETF such as IWB can be an alternative.