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Should iShares S&P MidCap 400 Growth ETF (IJK) Be on Your Investing Radar?

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If you're interested in broad exposure to the Mid Cap Growth segment of the US equity market, look no further than the iShares S&P MidCap 400 Growth ETF (IJK - Free Report) , a passively managed exchange traded fund launched on 07/24/2000.

The fund is sponsored by Blackrock. It has amassed assets over $7.19 billion, making it one of the larger ETFs attempting to match the Mid Cap Growth segment of the US equity market.

Why Mid Cap Growth

Mid cap companies have market capitalization between $2 billion and $10 billion. They usually have higher growth prospects than large cap companies and are less volatile than small cap companies. These types of companies, then, have a good balance of stability and growth potential.

While growth stocks do boast higher than average sales and earnings growth rates, and they are expected to grow faster than the wider market, investors should note these kinds of stocks have higher valuations. Further, growth stocks have a higher level of volatility associated with them. Compared to value stocks, growth stocks are a safer bet in a strong bull market, but don't perform as strongly in almost all other financial environments.

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 0.17%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.96%.

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 Industrials sector--about 19.60% of the portfolio. Consumer Discretionary and Information Technology round out the top three.

Looking at individual holdings, Carlisle Companies Inc (CSL - Free Report) accounts for about 1.51% of total assets, followed by Targa Resources Corp (TRGP - Free Report) and Steel Dynamics Inc (STLD - Free Report) .

The top 10 holdings account for about 9.89% of total assets under management.

Performance and Risk

IJK seeks to match the performance of the S&P MidCap 400 Growth Index before fees and expenses. The S&P MidCap 400 Growth Index measures the performance of the mid-capitalization growth sector of the U.S. equity market.

The ETF has lost about -15.70% so far this year and is down about -18.14% in the last one year (as of 11/17/2022). In the past 52-week period, it has traded between $61.85 and $86.92.

The ETF has a beta of 1.08 and standard deviation of 29.04% for the trailing three-year period, making it a medium risk choice in the space. With about 239 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares S&P MidCap 400 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, IJK is a good option for those seeking exposure to the Style Box - Mid Cap Growth area of the market. Investors might also want to consider some other ETF options in the space.

The Vanguard MidCap Growth ETF (VOT - Free Report) and the iShares Russell MidCap Growth ETF (IWP - Free Report) track a similar index. While Vanguard MidCap Growth ETF has $9.83 billion in assets, iShares Russell MidCap Growth ETF has $12.21 billion. VOT has an expense ratio of 0.07% and IWP charges 0.23%.

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.

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