If you're interested in broad exposure to the Large Cap Growth segment of the US equity market, look no further than the iShares Russell Top 200 Growth ETF (
IWY Quick Quote IWY - Free Report) , a passively managed exchange traded fund launched on 09/22/2009.
The fund is sponsored by Blackrock. It has amassed assets over $4.64 billion, making it one of the larger ETFs attempting to match the Large Cap Growth segment of the US equity market.
Why Large Cap Growth
Companies that find themselves in the large cap category typically have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.
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.
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 0.20%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 0.76%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. 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 48.20% of the portfolio. Consumer Discretionary and Healthcare round out the top three.
Looking at individual holdings, Apple Inc (
AAPL Quick Quote AAPL - Free Report) accounts for about 15.61% of total assets, followed by Microsoft Corp ( MSFT Quick Quote MSFT - Free Report) and Amazon Com Inc ( AMZN Quick Quote AMZN - Free Report) .
The top 10 holdings account for about 50.64% of total assets under management.
Performance and Risk
IWY seeks to match the performance of the Russell Top 200 Growth Index before fees and expenses. The Russell Top 200 Growth Index is a style factor weighted index that measures the performance of the largest capitalization growth sector of the U.S. equity market. It is a subset of the Russell Top 200 Index issuers with relatively higher price-to-book ratios and higher forecasted growth, which measures the performance of the largest capitalization sector of the U.S. equity market.
The ETF has lost about -25.72% so far this year and is down about -24.33% in the last one year (as of 11/25/2022). In the past 52-week period, it has traded between $117.55 and $175.61.
The ETF has a beta of 1.06 and standard deviation of 27.97% for the trailing three-year period, making it a medium risk choice in the space. With about 117 holdings, it effectively diversifies company-specific risk.
IShares Russell Top 200 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, IWY is a good option for those seeking exposure to the Style Box - Large Cap Growth area of the market. Investors might also want to consider some other ETF options in the space.
The Vanguard Growth ETF (
VUG Quick Quote VUG - Free Report) and the Invesco QQQ ( QQQ Quick Quote QQQ - Free Report) track a similar index. While Vanguard Growth ETF has $71.98 billion in assets, Invesco QQQ has $163.53 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%. 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.