Designed to provide broad exposure to the Small Cap Blend segment of the US equity market, the iShares Russell 2000 ETF (
IWM Quick Quote IWM - Free Report) is a passively managed exchange traded fund launched on 05/22/2000.
The fund is sponsored by Blackrock. It has amassed assets over $48.45 billion, making it one of the largest ETFs attempting to match the Small Cap Blend segment of the US equity market.
Why Small Cap Blend
Sitting at a market capitalization below $2 billion, small cap companies tend to be high-potential stocks compared to its large and mid cap counterparts, but come with higher risk.
Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.19%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.46%.
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 Healthcare sector--about 18.30% of the portfolio. Financials and Industrials round out the top three.
Looking at individual holdings, Shockwave Medical Inc (
SWAV Quick Quote SWAV - Free Report) accounts for about 0.40% of total assets, followed by Biohaven Pharmaceutical Holding Co ( BHVN Quick Quote BHVN - Free Report) and Karuna Therapeutics Inc ( KRTX Quick Quote KRTX - Free Report) . Performance and Risk
IWM seeks to match the performance of the Russell 2000 Index before fees and expenses. The Russell 2000 Index measures the performance of the small capitalization sector of the U.S. equity market.
The ETF has lost about -25.49% so far this year and is down about -23.67% in the last one year (as of 09/30/2022). In the past 52-week period, it has traded between $163.90 and $242.56.
The ETF has a beta of 1.15 and standard deviation of 30.19% for the trailing three-year period, making it a medium risk choice in the space. With about 1980 holdings, it effectively diversifies company-specific risk.
IShares Russell 2000 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, IWM is a good option for those seeking exposure to the Style Box - Small Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.
The Vanguard SmallCap ETF (
VB Quick Quote VB - Free Report) and the iShares Core S&P SmallCap ETF ( IJR Quick Quote IJR - Free Report) track a similar index. While Vanguard SmallCap ETF has $37.67 billion in assets, iShares Core S&P SmallCap ETF has $59.18 billion. VB has an expense ratio of 0.05% and IJR charges 0.06%. 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.