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Should iShares Russell 2000 Growth ETF (IWO) Be on Your Investing Radar?
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Designed to provide broad exposure to the Small Cap Growth segment of the US equity market, the iShares Russell 2000 Growth ETF (IWO - Free Report) is a passively managed exchange traded fund launched on 07/24/2000.
The fund is sponsored by Blackrock. It has amassed assets over $9.45 billion, making it one of the largest ETFs attempting to match the Small Cap Growth segment of the US equity market.
Why Small Cap Growth
There's a lot of potential to investing in small cap companies, but with market capitalization below $2 billion, that high potential comes with even higher risk.
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. Something to keep in mind is the higher level of volatility that is affiliated with growth stocks. 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
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 0.74%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. 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 22.60% of the portfolio. Information Technology and Industrials round out the top three.
Looking at individual holdings, Shockwave Medical Inc (SWAV - Free Report) accounts for about 0.72% of total assets, followed by Halozyme Therapeutics Inc (HALO - Free Report) and Emcor Group Inc (EME - Free Report) .
The top 10 holdings account for about 5.78% of total assets under management.
Performance and Risk
IWO seeks to match the performance of the Russell 2000 Growth Index before fees and expenses. The Russell 2000 Growth Index measures the performance of the small-capitalization growth sector of the U.S. equity market. It is a subset of the Russell 2000 Index, which measures the performance of the small-capitalization sector of the U.S. equity market & approximately 51% of the total market value of the Russell 2000 Index.
The ETF has lost about -0.94% so far this year and is down about -23.80% in the last one year (as of 01/06/2023). In the past 52-week period, it has traded between $194.20 and $279.
The ETF has a beta of 1.13 and standard deviation of 32.10% for the trailing three-year period, making it a high risk choice in the space. With about 1113 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares Russell 2000 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, IWO is a reasonable option for those seeking exposure to the Style Box - Small Cap Growth area of the market. Investors might also want to consider some other ETF options in the space.
The iShares S&P SmallCap 600 Growth ETF (IJT - Free Report) and the Vanguard SmallCap Growth ETF (VBK - Free Report) track a similar index. While iShares S&P SmallCap 600 Growth ETF has $5.17 billion in assets, Vanguard SmallCap Growth ETF has $11.88 billion. IJT has an expense ratio of 0.18% and VBK charges 0.07%.
Bottom-Line
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
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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Should iShares Russell 2000 Growth ETF (IWO) Be on Your Investing Radar?
Designed to provide broad exposure to the Small Cap Growth segment of the US equity market, the iShares Russell 2000 Growth ETF (IWO - Free Report) is a passively managed exchange traded fund launched on 07/24/2000.
The fund is sponsored by Blackrock. It has amassed assets over $9.45 billion, making it one of the largest ETFs attempting to match the Small Cap Growth segment of the US equity market.
Why Small Cap Growth
There's a lot of potential to investing in small cap companies, but with market capitalization below $2 billion, that high potential comes with even higher risk.
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. Something to keep in mind is the higher level of volatility that is affiliated with growth stocks. 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
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 0.74%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. 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 22.60% of the portfolio. Information Technology and Industrials round out the top three.
Looking at individual holdings, Shockwave Medical Inc (SWAV - Free Report) accounts for about 0.72% of total assets, followed by Halozyme Therapeutics Inc (HALO - Free Report) and Emcor Group Inc (EME - Free Report) .
The top 10 holdings account for about 5.78% of total assets under management.
Performance and Risk
IWO seeks to match the performance of the Russell 2000 Growth Index before fees and expenses. The Russell 2000 Growth Index measures the performance of the small-capitalization growth sector of the U.S. equity market. It is a subset of the Russell 2000 Index, which measures the performance of the small-capitalization sector of the U.S. equity market & approximately 51% of the total market value of the Russell 2000 Index.
The ETF has lost about -0.94% so far this year and is down about -23.80% in the last one year (as of 01/06/2023). In the past 52-week period, it has traded between $194.20 and $279.
The ETF has a beta of 1.13 and standard deviation of 32.10% for the trailing three-year period, making it a high risk choice in the space. With about 1113 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares Russell 2000 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, IWO is a reasonable option for those seeking exposure to the Style Box - Small Cap Growth area of the market. Investors might also want to consider some other ETF options in the space.
The iShares S&P SmallCap 600 Growth ETF (IJT - Free Report) and the Vanguard SmallCap Growth ETF (VBK - Free Report) track a similar index. While iShares S&P SmallCap 600 Growth ETF has $5.17 billion in assets, Vanguard SmallCap Growth ETF has $11.88 billion. IJT has an expense ratio of 0.18% and VBK charges 0.07%.
Bottom-Line
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
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.