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

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Launched on 07/24/2000, the iShares S&P SmallCap 600 Value ETF (IJS - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Small Cap Value segment of the US equity market.

The fund is sponsored by Blackrock. It has amassed assets over $6.70 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.

While value stocks have lower than average price-to-earnings and price-to-book ratios, they also have lower than average sales and earnings growth rates. Value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value stocks in strong bull 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 0.18%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 1.73%.

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 Financials sector--about 17.20% of the portfolio. Industrials and Consumer Discretionary round out the top three.

Looking at individual holdings, Blk Csh Fnd Treasury Sl Agency (XTSLA) accounts for about 2.31% of total assets, followed by Helmerich & Payne Inc (HP - Free Report) and S Jersey Inds Inc (SJI - Free Report) .

The top 10 holdings account for about 8.83% of total assets under management.

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 -13.90% so far this year and is down about -7.17% in the last one year (as of 09/20/2022). In the past 52-week period, it has traded between $86.20 and $110.76.

The ETF has a beta of 1.15 and standard deviation of 31.24% for the trailing three-year period, making it a medium risk choice in the space. With about 519 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares S&P SmallCap 600 Value 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, IJS is an outstanding 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 $12.02 billion in assets, Vanguard SmallCap Value ETF has $22.96 billion. IWN has an expense ratio of 0.23% and VBR charges 0.07%.

Bottom-Line

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they 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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