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Should iShares Russell MidCap Growth ETF (IWP) Be on Your Investing Radar?

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The iShares Russell MidCap Growth ETF (IWP - Free Report) was launched on 07/17/2001, and is a passively managed exchange traded fund designed to offer broad exposure to the Mid Cap Growth segment of the US equity market.

The fund is sponsored by Blackrock. It has amassed assets over $11.08 billion, making it the largest ETFs attempting to match the Mid Cap Growth segment of the US equity market.

Why Mid Cap Growth

With market capitalization between $2 billion and $10 billion, mid cap companies usually contain higher growth prospects than large cap companies, and are considered less risky than their small cap counterparts. Thus they have a nice balance of growth potential and stability.

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. Also, growth stocks are a type of equity that carries more risk compared to others. Even though growth stocks are more likely to outperform their value counterparts in strong bull markets, value stocks have a record of delivering better returns in almost all markets than growth stocks.

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 0.23%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.51%.

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 33.90% of the portfolio. Healthcare and Industrials round out the top three.

Looking at individual holdings, Palo Alto Networks Inc (PANW - Free Report) accounts for about 1.37% of total assets, followed by Idexx Laboratories Inc (IDXX - Free Report) and Chipotle Mexican Grill Inc (CMG - Free Report) .

The top 10 holdings account for about 11.49% of total assets under management.

Performance and Risk

IWP seeks to match the performance of the Russell MidCap Growth Index before fees and expenses. The Russell Midcap Growth Index measures the performance of the mid-capitalization growth sector of the U.S. equity market. It is a subset of the Russell Midcap Index, which measures the performance of the mid-capitalization sector of the U.S. equity market & approximately 47% of the total market value of the Russell Midcap Index.

The ETF has lost about -29.66% so far this year and is down about -23.23% in the last one year (as of 05/25/2022). In the past 52-week period, it has traded between $79.18 and $123.28.

The ETF has a beta of 1.11 and standard deviation of 27.50% for the trailing three-year period, making it a medium risk choice in the space. With about 396 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares Russell MidCap Growth ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, IWP is a great option for investors seeking exposure to the Style Box - Mid Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.

The iShares S&P MidCap 400 Growth ETF (IJK - Free Report) and the Vanguard MidCap Growth ETF (VOT - Free Report) track a similar index. While iShares S&P MidCap 400 Growth ETF has $6.42 billion in assets, Vanguard MidCap Growth ETF has $9.11 billion. IJK has an expense ratio of 0.17% and VOT 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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