Should iShares Morningstar Small-Cap ETF (JKJ) Be on Your Investing Radar?

Looking for broad exposure to the Small Cap Blend segment of the US equity market? You should consider the iShares Morningstar Small-Cap ETF (JKJ), a passively managed exchange traded fund launched on 06/28/2004.

The fund is sponsored by Blackrock. It has amassed assets over $228.66 M, making it one of the average sized ETFs attempting to match the Small Cap Blend segment of the US equity market.

Why Small Cap Blend

There's a lot of potential to investing in small cap companies, but with market capitalization below $2 billion, that high potential comes with even higher risk.

Typically holding a combination of both growth and value stocks, blend ETFs also demonstrate qualities seen in value and growth investments.

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.25%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.39%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Industrials sector--about 19.10% of the portfolio. Financials and Real Estate round out the top three.

Looking at individual holdings, Oshkosh Corp (OSK) accounts for about 0.81% of total assets, followed by Ciena Corp (CIEN) and Primerica Inc (PRI).

The top 10 holdings account for about 7.33% of total assets under management.

Performance and Risk

JKJ seeks to match the performance of the Morningstar Small Core Index before fees and expenses. The Morningstar Small Core Index measures the performance of stocks issued by small-capitalization companies.

The ETF has gained about 14.88% so far this year and is up roughly 1.06% in the last one year (as of 02/15/2019). In the past 52-week period, it has traded between $139.81 and $186.23.

The ETF has a beta of 1.12 and standard deviation of 14.20% for the trailing three-year period, making it a medium risk choice in the space. With about 280 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares Morningstar Small-Cap ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, JKJ is a sufficient option for those seeking exposure to the Style Box - Small Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Russell 2000 ETF (IWM) and the iShares Core S&P Small-Cap ETF (IJR) track a similar index. While iShares Russell 2000 ETF has $43.11 B in assets, iShares Core S&P Small-Cap ETF has $44.19 B. IWM has an expense ratio of 0.19% and IJR charges 0.07%.

Bottom-Line

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

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iShares Morningstar Small-Cap ETF (JKJ): ETF Research Reports
 
Primerica, Inc. (PRI) : Free Stock Analysis Report
 
Oshkosh Corporation (OSK) : Free Stock Analysis Report
 
Ciena Corporation (CIEN) : Free Stock Analysis Report
 
iShares Core S&P Small-Cap ETF (IJR): ETF Research Reports
 
iShares Russell 2000 ETF (IWM): ETF Research Reports
 
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