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Should iShares S&P SmallCap 600 Value ETF (IJS) Be on Your Investing Radar?

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Looking for broad exposure to the Small Cap Value segment of the US equity market? You should consider the iShares S&P SmallCap 600 Value ETF (IJS - Free Report) , a passively managed exchange traded fund launched on 07/24/2000.

The fund is sponsored by Blackrock. It has amassed assets over $7.08 billion, making it one of the largest ETFs attempting to match the Small Cap Value segment of the US equity market.

Why Small Cap Value

With more potential comes more risk, and small cap companies, with market capitalization below $2 billion, epitomizes this way of thinking.

Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. Considering long-term performance, value stocks have outperformed growth stocks in almost all markets; however, they are more likely to underperform growth stocks in strong bull markets.

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 0.18%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 1.64%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Financials sector--about 19.80% of the portfolio. Industrials and Consumer Discretionary round out the top three.

Looking at individual holdings, Helmerich & Payne Inc (HP - Free Report) accounts for about 0.85% of total assets, followed by S Jersey Inds Inc and Cvb Financial Corp (CVBF - Free Report) .

Performance and Risk

IJS seeks to match the performance of the S&P SmallCap 600 Value Index before fees and expenses. The S&P SmallCap 600 Value Index measures the performance of the small capitalization value sector of the U.S. equity market.

The ETF has lost about -8.45% so far this year and is down about -8.72% in the last one year (as of 11/22/2022). In the past 52-week period, it has traded between $82.45 and $108.55.

The ETF has a beta of 1.17 and standard deviation of 31.86% for the trailing three-year period, making it a medium risk choice in the space. With about 501 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares S&P SmallCap 600 Value ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, IJS is an excellent option for investors seeking exposure to the Style Box - Small Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.

The iShares Russell 2000 Value ETF (IWN - Free Report) and the Vanguard SmallCap Value ETF (VBR - Free Report) track a similar index. While iShares Russell 2000 Value ETF has $12.46 billion in assets, Vanguard SmallCap Value ETF has $24.29 billion. IWN has an expense ratio of 0.23% and VBR 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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