Yahoo Finance Should iShares Russell 2000 Growth ETF (IWO) Be on Your Investing Radar?
Launched on 07/24/2000, the iShares Russell 2000 Growth ETF (IWO) is a passively managed exchange traded fund designed to provide a broad exposure to the Small Cap Growth segment of the US equity market.
The fund is sponsored by Blackrock. It has amassed assets over $11.04 billion, making it one of the largest ETFs attempting to match the Small Cap Growth segment of the US equity market.
Why Small Cap Growth
Small cap companies have market capitalization below $2 billion. They usually have higher potential than large and mid cap companies with stocks but higher risk.
Growth stocks have higher than average sales and earnings growth rates. While these are expected to grow faster than the broader market, they also have higher valuations. Further, growth stocks have a higher level of volatility associated with them. They are likely to outperform value stocks in strong bull markets but over the longer-term, value stocks have delivered better returns than growth stocks in almost all markets.
Costs
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.24%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.65%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Information Technology sector--about 24.60% of the portfolio. Healthcare and Industrials round out the top three.
Looking at individual holdings, Super Micro Computer Inc (SMCI) accounts for about 3.35% of total assets, followed by Microstrategy Inc Class A (MSTR) and Comfort Systems Usa Inc (FIX).
The top 10 holdings account for about 10.32% of total assets under management.
Performance and Risk
IWO seeks to match the performance of the Russell 2000 Growth Index before fees and expenses. The Russell 2000 Growth Index measures the performance of the small-capitalization growth sector of the U.S. equity market. It is a subset of the Russell 2000 Index, which measures the performance of the small-capitalization sector of the U.S. equity market & approximately 51% of the total market value of the Russell 2000 Index.
The ETF return is roughly 5.11% so far this year and is up about 15.92% in the last one year (as of 05/23/2024). In the past 52-week period, it has traded between $204.07 and $270.80.
The ETF has a beta of 1.15 and standard deviation of 24.81% for the trailing three-year period, making it a high risk choice in the space. With about 1073 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares Russell 2000 Growth 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, IWO is a reasonable option for those seeking exposure to the Style Box - Small Cap Growth area of the market. Investors might also want to consider some other ETF options in the space.
The iShares S&P Small-Cap 600 Growth ETF (IJT) and the Vanguard Small-Cap Growth ETF (VBK) track a similar index. While iShares S&P Small-Cap 600 Growth ETF has $5.88 billion in assets, Vanguard Small-Cap Growth ETF has $17.01 billion. IJT has an expense ratio of 0.18% and VBK charges 0.07%.
Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are 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 Russell 2000 Growth ETF (IWO): ETF Research Reports
Super Micro Computer, Inc. (SMCI) : Free Stock Analysis Report
Comfort Systems USA, Inc. (FIX) : Free Stock Analysis Report
MicroStrategy Incorporated (MSTR) : Free Stock Analysis Report
iShares S&P Small-Cap 600 Growth ETF (IJT): ETF Research Reports
Vanguard Small-Cap Growth ETF (VBK): ETF Research Reports
