The iShares Russell 2000 Growth ETF (IWO) is a passively managed exchange-traded fund designed to provide broad exposure to the small cap growth segment of the U.S. equity market, launched on July 24, 2000. am.
This fund is sponsored by BlackRock. Having amassed over $9.45 billion in assets, he is one of the largest ETFs seeking to compete against the small-cap growth segment of the US stock market.
Reasons for small-cap growth
There is a lot of potential in investing in small-cap stocks, but with market caps below $2 billion, the high potential comes with even higher risks.
Growth stocks boast average sales and earnings growth and are expected to grow faster than the broader market, but investors should be aware of the high valuations for these types of stocks. The thing to remember is the high level of volatility associated with growth stocks. Growth stocks are likely to outperform value stocks in bull markets, but value stocks have a record of providing better returns than growth stocks in almost every market.
cost
Investors should also pay attention to the ETF’s expense ratio. Assuming all other metrics are equal, low-cost products produce better results than high-cost products.
The annual operating cost of this ETF is 0.23%, which is on par with most similar products in this space.
The 12-month trailing dividend yield is 0.74%.
Sector exposure and top holdings
While there are many benefits to this type of fund, such as diversified exposure that minimizes the risk of single stocks, it is important to take a closer look at ETF holdings before investing. Most ETFs are also highly transparent products, disclosing their holdings on a daily basis.
This ETF has the largest allocation to the healthcare sector, accounting for approximately 22.60% of the portfolio. Information technology and industry round out the top three.
Looking at individual holdings, Shockwave Medical Inc (SWAV) accounts for about 0.72% of total assets, followed by Halozyme Therapeutics Inc (HALO) and Emcor Group Inc (EME).
The top 10 stocks account for approximately 5.78% of total assets under management.
performance and risk
The IWO seeks to match the performance before fees and expenses of the Russell 2000 Growth Index. The Russell 2000 Growth Index measures the performance of small-cap growth sectors in the US equity market. It is a subset of the Russell 2000 Index and measures the performance of the small-cap sector of the US equity market, representing approximately 51% of the total market value of the Russell 2000 Index.
The ETF is down about -0.94% so far this year and is down about -23.80% over the past year (as of 6 January 2023). Over the past 52 weeks, it has traded between $194.20 and $279.
The ETF’s beta is 1.13, with a standard deviation of 32.10% over the past three years, making it a riskier option in this space. Approximately 1113 holdings effectively diversify company-specific risks.
Alternative proposal
The IShares Russell 2000 Growth ETF has a Zacks ETF Rank of 3 (Hold). This is based on factors such as expected asset class returns, expense ratios and momentum. Therefore, the IWO is a reasonable option for those looking for exposure to the style box of the market – small cap growth area. Investors may also want to consider his other ETF options in this area.
The iShares S&P SmallCap 600 Growth ETF (IJT) and Vanguard SmallCap Growth ETF (VBK) track similar indices. The iShares S&P SmallCap 600 Growth ETF has $5.17 billion in assets, while the Vanguard SmallCap Growth ETF has $11.88 billion in assets. IJT’s expense ratio is 0.18% and VBK’s fee is 0.07%.
bottom line
While an excellent vehicle for long-term investors, passively managed ETFs are popular among institutional and retail investors due to their low cost, transparency, flexibility and tax benefits.
Visit the Zacks ETF Center to learn more about this and other ETFs, select products that match your investment objectives, and read articles on the latest developments in the ETF investment universe.
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iShares Russell 2000 Growth ETF (IWO): ETF Research Report
EMCOR Group, Inc. (EME): Free Stock Analysis Report
Halozyme Therapeutics, Inc. (HALO): Free Stock Analysis Report
iShares S&P SmallCap 600 Growth ETF (IJT): ETF Research Report
Vanguard SmallCap Growth ETF (VBK): ETF Research Report
ShockWave Medical, Inc. (SWAV) : Free Inventory Analysis Report
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