A smart beta exchange traded fund, the iShares International Small-Cap Equity Factor ETF (ISCF) debuted on 04/28/2015, and offers broad exposure to the Foreign Small/Mid Blend ETF category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is sponsored by Blackrock. It has amassed assets over $642.69 million, making it one of the average sized ETFs in the Foreign Small/Mid Blend ETF. This particular fund, before fees and expenses, seeks to match the performance of the MSCI World exUSA Small Cap Diversified Multiple-Factor Index.
The STOXX International Small-Cap Equity Factor Index composes of global developed market small-capitalization stocks, excluding the US, that have favourable exposure to target style factors subject to constraints.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.24% for this ETF, which makes it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 3.71%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Taking into account individual holdings, Abn Amro Bank Nv (ABN) accounts for about 0.85% of the fund's total assets, followed by Banco De Sabadell Sa (SAB) and Finning International Inc (FTT).
ISCF's top 10 holdings account for about 5.4% of its total assets under management.
Performance and Risk
The ETF has added about 6.83% and it's up approximately 15.09% so far this year and in the past one year (as of 07/10/2026), respectively. ISCF has traded between $38.63 and $45.71 during this last 52-week period.
The fund has a beta of 0.81 and standard deviation of 15.09% for the trailing three-year period, which makes ISCF a medium risk choice in this particular space. With about 1181 holdings, it effectively diversifies company-specific risk .
Alternatives
iShares International Small-Cap Equity Factor ETF is a reasonable option for investors seeking to outperform the Foreign Small/Mid Blend ETF segment of the market. However, there are other ETFs in the space which investors could consider.
State Street SPDR S&P International Small Cap ETF (GWX) tracks S&P Developed Ex-U.S. Under USD2 Billion Index and the Schwab International Small-Cap Equity ETF (SCHC) tracks FTSE DEVELOPED SMALL CAP EX US LIQUID INDEX. State Street SPDR S&P International Small Cap ETF has $861.27 million in assets, Schwab International Small-Cap Equity ETF has $5.35 billion. GWX has an expense ratio of 0.40% and SCHC changes 0.08%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Foreign Small/Mid Blend ETF
Bottom Line
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iShares International Small-Cap Equity Factor ETF (ISCF): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).