The Zacks Analyst Blog Highlights: iShares Russell Mid-Cap Growth ETF, iShares S&P MidCap 400 Growth Index Fund and Vanguard Mid-Cap Growth ETF - Press Releases
For Immediate Release
Chicago, IL – March 25, 2015 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the iShares Russell Mid-Cap Growth ETF (IWP-Free Report), iShares S&P MidCap 400 Growth Index Fund (IJK-Free Report) and Vanguard Mid-Cap Growth ETF (VOT-Free Report).
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Here are highlights from Tuesday’s Analyst Blog:
3 Top-Ranked Mid-Cap ETFs to Buy Now
Mid-caps have mostly been overlooked investing options. These securities with the middle-of-the path approach are viewed as big and safe compared to the highly volatile small cap exposure. But when compared to the stability of the large caps these are relatively too risky and uncertain. However, investors ignoring this key segment of the investing spectrum should note that lately the rally in the mid cap ETFs has taken root.
Till the Fed meeting on March 18, the U.S. small-cap segment was viewed as the most promising part of the investing world as the U.S. economy was the lone star in the developed nations’ pack owing to a healing job market, improving housing data and better consumer savings. The greenback hit multi-year highs compared to the basket of other currencies which along with the cut in the consumers’ energy bills boosted U.S. imports (read: Top-Ranked Small Cap ETFs for a Growing Economy).
All these brightened the appeal for small-cap ETFs investing as smaller companies pick up faster than the larger ones in a growing economy. On the other hand, although the U.S. markets are still hovering near all-time highs, global growth has been floundering. Further, the rate-rising speculation in the U.S., deflationary worries in Europe and a stronger U.S. dollar could not do justice to the U.S. large caps.
In such a situation, the Fed came up with a caution stance on domestic growth in its March meeting. The central bank also slashed the U.S. economic growth projection (considering the central tendency method) for 2015 from 2.6−3% (guided in December) to 2.3−2.7%. The growth projections for 2016 and 2017 were also cut to 2.3−2.7% and 2.0−2.4%, respectively, from 2.5−3% and 2.3−2.5% (read: ETF Winners and a Loser Post Fed Meeting).
Understandably, the cut in domestic growth projections had an appalling impact on small-cap investing. The greenback also endured the most awful week since 2011. Inflation was also short of the Fed expectation, due to a slump in energy prices as well as low import prices.
So, all in all, situations were not favorable either for small caps due to the ongoing ‘moderation’ in the U.S. economy, or for the large caps due to the still waning global economy. In this backdrop, mid cap ETFs appear slightly more intriguing as these offer the best of both worlds, allowing growth and stability in many portfolio.
Top Ranked Mid Cap ETFs in Focus
We have found a number of ETFs that have a top Zacks ETF Rank in the mid cap space and are thus expected to outperform in the months to come. Below are three funds that we believe are the best choices to tap into the space (read: all the Top Ranked ETFs).
Shares Russell Mid-Cap Growth ETF (IWP-Free Report)
This ETF provides targeted exposure to the growth segment of the U.S. mid-cap space by tracking the Russell Midcap Growth Index. In total, the fund holds 550 stocks, which are widely spread across a number of securities. Each firm holds less than 1.11% of total assets (see all Mid Cap ETFs here).
However, the fund is slightly skewed toward Consumer Discretionary at nearly 23%, closely followed by Information Technology (18.47%) and Industrials (15.67%). The product has amassed $6.5 billion in its asset base while volume is moderate at 375,000 shares a day.
The ETF charges 25 bps in annual fees from investors.
IWP added about 2.9% over the past week (as of March 20, 2015) and has a Zacks ETF Rank #1 (Strong Buy) with a ‘Medium’ risk outlook.
iShares S&P MidCap 400 Growth Index Fund (IJK-Free Report)
The fund tracks the S&P MidCap 400/Citigroup Growth Index, holds about 225 companies in its basket, sees good volume, and charges investors a fee of 25 bps a year. The product is widely spread out across each security and sector. The fund has accumulated around $5.5 billion in its asset base.
In terms of sectors, Financials take the top spot at roughly 23% of the total while Information Technology, Consumer Discretionary, Industrials and Health Care account for double-digit exposure. IJK was up 3.6% in the last one week (as of March 20, 2015).
This product also has a Zacks ETF Rank #1 with a moderate risk outlook, suggesting that it is poised to outperform in the long run and especially over other choices in the space.
Vanguard Mid-Cap Growth ETF (VOT-Free Report)
This fund also targets the growth segment of the U.S. mid cap equity market, by tracking the CRSP US Mid Cap Growth Index. Holding 185 securities in its basket, the fund is highly diversified across each component with none holding more than 1.6% share.
In terms of sector exposure, Industrials occupy the top position at 21.2%, followed by Consumer Services (18.8%) and Consumer Goods (18.8%). The product has managed over $3.5 billion in its asset base and trades in moderate volume of around 175,000 shares. Expense ratio came in at 0.09%. VOT returned about 3% in the last one week (as of March 20, 2015).
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ISHARS-RS M GR (IWP): ETF Research Reports
ISHARS-SP MC GR (IJK): ETF Research Reports
VANGD-MC GROWTH (VOT): ETF Research Reports
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