ETFs
Should the iShares Russell 2000 Value ETF (IWN) be on your investment radar?
Looking for broad exposure to the Small Cap Value segment of the U.S. equity market? You should consider the iShares Russell 2000 Value ETF (IWN), a passively managed exchange-traded fund launched on 07/24/2000.
The fund is sponsored by Blackrock. It has accumulated over $11.27 billion in assets, making it one of the largest ETFs attempting to match the Small Cap Value segment of the U.S. stock market.
Why choose Small Cap Value
Small-cap companies have a market capitalization of less than $2 billion. They generally have higher potential than large- and mid-cap companies, but have higher risk.
Value stocks are known for their below-average price-to-earnings and price-to-book ratios, but investors should also consider their below-average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost every market. However, they are likely to underperform growth stocks in strong bull markets.
Costs
Investors should also pay attention to an ETF’s expense ratio. Lower-cost products will perform better than higher-cost ones, assuming all other metrics remain the same.
The annual operating expenses of this ETF are 0.24%, making it one of the cheapest products in the sector.
Its 12-month rolling dividend yield is 2.04%.
Sector exposure and main holdings
While ETFs offer diversified exposure that minimizes the risk associated with any one security, it is still important to review a fund’s holdings before investing. Fortunately, most ETFs are highly transparent products that disclose their holdings daily.
This ETF is primarily dedicated to the financial sector, representing approximately 25.80% of the portfolio. The industrial and consumer discretionary sectors round out the top three.
Looking at individual holdings, Chord Energy Corp- (CHRD) represents about 0.84% of total assets, followed by Permian Resources Corp Class A- (PR) and Carvana Class A- (CVNA).
The top 10 stocks represent approximately 5.16% of total assets under management.
Performance and risk
The IWN seeks to match the performance of the Russell 2000 Value Index before fees and expenses. The Russell 2000 Value Index measures the performance of the small-cap sector of the U.S. stock market.
The ETF is down about -1.89% year-to-date and is up about 10.31% over the past year (as of 07/09/2024). Over the past 52 weeks, it has traded between $125.51 and $158.93.
The ETF has a beta of 1.15 and a standard deviation of 21.48% over the past three years, making it a medium-risk pick in this sector. With around 1,412 stocks, it effectively diversifies company-specific risk.
The story continues
Alternatives
The IShares Russell 2000 Value ETF is rated 3 (Hold) by Zacks, based on the asset class’s expected return, expense ratio and momentum, among other factors. Thus, IWN is a reasonable option for those seeking exposure to the Style Box – Small Cap Value sector of the market. Investors may also want to consider other ETF options in this area.
The Avantis US Small Cap Value ETF (AVUV) and the Vanguard Small-Cap Value ETF (VBR) track a similar index. While the Avantis US Small Cap Value ETF has $11.37 billion in assets, the Vanguard Small-Cap Value ETF has $27.34 billion. AVUV has an expense ratio of 0.25% and VBR charges 0.07%.
Conclusion
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility and tax efficiency; they are also excellent vehicles for long-term investors.
To learn more about this and other ETFs, find products that match your investment goals, and read articles on the latest developments in the ETF investment universe, visit Zacks ETF Center.
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iShares Russell 2000 Value ETF (IWN): ETF Research Reports
Vanguard Small-Cap Value ETF (VBR): ETF Research Reports
Carvana Co. (CVNA) : Free Stock Analysis Report
Avantis US Small Cap Value ETF (AVUV): ETF Research Reports
Chord Energy Corporation (CHRD) : Free Stock Analysis Report
Permian Resources Corporation (PR): Free Stock Analysis Report