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Should iShares Morningstar Mid-Cap Growth ETF (JKH) Be on Your Investing Radar?

Zacks Equity Research

The iShares Morningstar Mid-Cap Growth ETF (JKH) was launched on 06/28/2004, and is a passively managed exchange traded fund designed to offer broad exposure to the Mid Cap Growth segment of the US equity market.

The fund is sponsored by Blackrock. It has amassed assets over $610.06 M, making it one of the average sized ETFs attempting to match the Mid Cap Growth segment of the US equity market.

Why Mid Cap Growth

Mid cap companies, with market capitalization in the range of $2 billion and $10 billion, offer investors many things that small and large companies don't, including less risk and higher growth opportunities. Thus, companies that fall under this category provide a stable and growth-heavy investment.

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. Additionally, growth stocks have a greater level of risk associated with them. Compared to value stocks, growth stocks are a safer bet in a strong bull market, but don't perform as strongly in almost all other financial environments.

Costs

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

Annual operating expenses for this ETF are 0.30%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.23%.

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 Information Technology sector--about 32.20% of the portfolio. Healthcare and Industrials round out the top three.

Looking at individual holdings, Mercadolibre Inc (MELI) accounts for about 1.31% of total assets, followed by Hilton Worldwide Holdings Inc (HLT) and Global Payments Inc (GPN).

The top 10 holdings account for about 11.8% of total assets under management.

Performance and Risk

JKH seeks to match the performance of the Morningstar Mid Growth Index before fees and expenses. The Morningstar Mid Growth Index measures the performance of stocks issued by mid-capitalization companies. The Morningstar index methodology defines mid-capitalization stocks as those stocks that form the 20% of market capitalization between the 70th and 90th percentile of the market capitalization of the stocks eligible to be included in the Morningstar US Market Index.

The ETF has added roughly 33.64% so far this year and is up about 13.77% in the last one year (as of 07/29/2019). In the past 52-week period, it has traded between $180.97 and $259.55.

The ETF has a beta of 1.09 and standard deviation of 14.15% for the trailing three-year period, making it a medium risk choice in the space. With about 192 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares Morningstar Mid-Cap Growth ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, JKH is an outstanding option for investors seeking exposure to the Style Box - Mid Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.

The iShares S&P Mid-Cap 400 Growth ETF (IJK) and the iShares Russell Mid-Cap Growth ETF (IWP) track a similar index. While iShares S&P Mid-Cap 400 Growth ETF has $7.79 B in assets, iShares Russell Mid-Cap Growth ETF has $11.40 B. IJK has an expense ratio of 0.25% and IWP charges 0.25%.

Bottom-Line

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 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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iShares Morningstar Mid-Cap Growth ETF (JKH): ETF Research Reports
 
MercadoLibre, Inc. (MELI) : Free Stock Analysis Report
 
iShares Russell Mid-Cap Growth ETF (IWP): ETF Research Reports
 
Hilton Worldwide Holdings Inc. (HLT) : Free Stock Analysis Report
 
Global Payments Inc. (GPN) : Free Stock Analysis Report
 
iShares S&P Mid-Cap 400 Growth ETF (IJK): ETF Research Reports
 
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