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Should iShares Morningstar SmallCap Growth ETF (ISCG) Be on Your Investing Radar?
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Launched on 06/28/2004, the iShares Morningstar SmallCap Growth ETF (ISCG - Free Report) 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 $361.39 million, making it one of the average sized ETFs attempting to match the Small Cap Growth segment of the US equity market.
Why Small Cap Growth
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.
Qualities of growth stocks include faster growth rates compared to the broader market, as well as higher valuations and higher than average sales and earnings growth rates. Additionally, growth stocks have a greater level of risk 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
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.06%, making it the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.72%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Healthcare sector--about 22.90% of the portfolio. Information Technology and Industrials round out the top three.
Looking at individual holdings, Zoominfo Technologies Inc Class A (ZI - Free Report) accounts for about 0.61% of total assets, followed by Asana Inc Class A (ASAN - Free Report) and Crocs Inc (CROX - Free Report) .
Performance and Risk
ISCG seeks to match the performance of the MORNINGSTAR US SML CP BRD GRWTH EXTD ID before fees and expenses. The Morningstar US Small Cap Broad Growth Extended Index comprises of small-capitalization U.S. equities that exhibit growth characteristics.
The ETF has lost about -13.56% so far this year and is down about -17.34% in the last one year (as of 02/28/2022). In the past 52-week period, it has traded between $40.89 and $54.84.
The ETF has a beta of 1.10 and standard deviation of 27.62% for the trailing three-year period. With about 1281 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares Morningstar SmallCap 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, ISCG 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 Russell 2000 Growth ETF (IWO - Free Report) and the Vanguard SmallCap Growth ETF (VBK - Free Report) track a similar index. While iShares Russell 2000 Growth ETF has $10.39 billion in assets, Vanguard SmallCap Growth ETF has $14.10 billion. IWO has an expense ratio of 0.24% and VBK charges 0.07%.
Bottom-Line
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
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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Should iShares Morningstar SmallCap Growth ETF (ISCG) Be on Your Investing Radar?
Launched on 06/28/2004, the iShares Morningstar SmallCap Growth ETF (ISCG - Free Report) 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 $361.39 million, making it one of the average sized ETFs attempting to match the Small Cap Growth segment of the US equity market.
Why Small Cap Growth
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.
Qualities of growth stocks include faster growth rates compared to the broader market, as well as higher valuations and higher than average sales and earnings growth rates. Additionally, growth stocks have a greater level of risk 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
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.06%, making it the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.72%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Healthcare sector--about 22.90% of the portfolio. Information Technology and Industrials round out the top three.
Looking at individual holdings, Zoominfo Technologies Inc Class A (ZI - Free Report) accounts for about 0.61% of total assets, followed by Asana Inc Class A (ASAN - Free Report) and Crocs Inc (CROX - Free Report) .
Performance and Risk
ISCG seeks to match the performance of the MORNINGSTAR US SML CP BRD GRWTH EXTD ID before fees and expenses. The Morningstar US Small Cap Broad Growth Extended Index comprises of small-capitalization U.S. equities that exhibit growth characteristics.
The ETF has lost about -13.56% so far this year and is down about -17.34% in the last one year (as of 02/28/2022). In the past 52-week period, it has traded between $40.89 and $54.84.
The ETF has a beta of 1.10 and standard deviation of 27.62% for the trailing three-year period. With about 1281 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares Morningstar SmallCap 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, ISCG 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 Russell 2000 Growth ETF (IWO - Free Report) and the Vanguard SmallCap Growth ETF (VBK - Free Report) track a similar index. While iShares Russell 2000 Growth ETF has $10.39 billion in assets, Vanguard SmallCap Growth ETF has $14.10 billion. IWO has an expense ratio of 0.24% and VBK charges 0.07%.
Bottom-Line
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
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.