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Should iShares Core S&P Small-Cap ETF (IJR) Be on Your Investing Radar?

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Designed to provide broad exposure to the Small Cap Blend segment of the US equity market, the iShares Core S&P Small-Cap ETF (IJR - 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 $76.08 billion, making it the largest ETFs attempting to match the Small Cap Blend segment of the US equity market.

Why Small Cap Blend

With more potential comes more risk, and small cap companies, with market capitalization below $2 billion, epitomizes this way of thinking.

Typically holding a combination of both growth and value stocks, blend ETFs also demonstrate qualities seen in value and growth investments.

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 0.06%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 1.36%.

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 Industrials sector--about 18.40% of the portfolio. Consumer Discretionary and Information Technology round out the top three.

Looking at individual holdings, Blk Csh Fnd Treasury Sl Agency (XTSLA) accounts for about 2.16% of total assets, followed by Ensign Group Inc (ENSG - Free Report) and Fabrinet (FN - Free Report) .

The top 10 holdings account for about 7.11% of total assets under management.

Performance and Risk

IJR seeks to match the performance of the S&P SmallCap 600 Index before fees and expenses. The S&P SmallCap 600 Index measures the performance of the small capitalization sector of the U.S. equity market.

The ETF has lost about -3.15% so far this year and is up roughly 11.22% in the last one year (as of 04/15/2024). In the past 52-week period, it has traded between $87.61 and $110.52.

The ETF has a beta of 1.13 and standard deviation of 21.69% for the trailing three-year period, making it a medium risk choice in the space. With about 695 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares Core S&P Small-Cap 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, IJR is an outstanding option for investors seeking exposure to the Style Box - Small Cap Blend segment of the market. There are other additional ETFs in the space that investors could consider as well.

The Vanguard Small-Cap ETF (VB - Free Report) and the iShares Russell 2000 ETF (IWM - Free Report) track a similar index. While Vanguard Small-Cap ETF has $53.73 billion in assets, iShares Russell 2000 ETF has $61.91 billion. VB has an expense ratio of 0.05% and IWM charges 0.19%.

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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