If you're interested in broad exposure to the Large Cap Value segment of the US equity market, look no further than the iShares Russell Top 200 Value ETF (IWX - Free Report) , a passively managed exchange traded fund launched on 09/22/2009.
The fund is sponsored by Blackrock. It has amassed assets over $395.30 M, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
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.
Value stocks have lower than average price-to-earnings and price-to-book ratios. They also have lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.
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 0.20%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.22%.
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 Financials sector--about 25.40% of the portfolio. Healthcare and Energy round out the top three.
Looking at individual holdings, Jpmorgan Chase & Co (JPM - Free Report) accounts for about 4.10% of total assets, followed by Berkshire Hathaway Inc Class B (BRK.B - Free Report) and Exxon Mobil Corp (XOM - Free Report) .
The top 10 holdings account for about 31.64% of total assets under management.
Performance and Risk
IWX seeks to match the performance of the Russell Top 200 Value Index before fees and expenses. The Russell Top 200 Value Index is a style factor weighted index that measures the performance of the largest capitalization value sector of the U.S. equity market.
The ETF return is roughly 2.91% so far this year and it's up approximately 4.69% in the last one year (as of 12/03/2018). In the past 52-week period, it has traded between $49.32 and $55.81.
The ETF has a beta of 0.92 and standard deviation of 12.13% for the trailing three-year period, making it a medium risk choice in the space. With about 139 holdings, it effectively diversifies company-specific risk.
IShares Russell Top 200 Value 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, IWX is a reasonable option for those seeking exposure to the Large Cap ETFs area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 1000 Value ETF (IWD - Free Report) and the Vanguard Value ETF (VTV - Free Report) track a similar index. While iShares Russell 1000 Value ETF has $39.06 B in assets, Vanguard Value ETF has $43.94 B. IWD has an expense ratio of 0.20% and VTV charges 0.05%.
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.