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If you're interested in broad exposure to the Mid Cap Growth segment of the US equity market, look no further than the iShares Morningstar Mid-Cap Growth ETF (JKH), a passively managed exchange traded fund launched on 06/28/2004.
The fund is sponsored by Blackrock. It has amassed assets over $293.51 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
With market capitalization between $2 billion and $10 billion, mid cap companies usually contain higher growth prospects than large cap companies, and are considered less risky than their small cap counterparts. These types of companies, then, have a good balance of stability and growth potential.
Growth stocks have higher than average sales and earnings growth rates. While these are expected to grow faster than the broader market, they also have higher valuations. Also, growth stocks are a type of equity that carries more risk compared to others. 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.
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 0.40%.
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 Information Technology sector--about 29.60% of the portfolio. Healthcare and Industrials round out the top three.
Looking at individual holdings, Align Technology Inc (ALGN) accounts for about 1.37% of total assets, followed by Oreilly Automotive Inc (ORLY) and Rockwell Automation Inc (ROK).
The top 10 holdings account for about 11.42% 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 return is roughly 11.68% so far this year and was up about 25.00% in the last one year (as of 08/14/2018). In the past 52-week period, it has traded between $181.10 and $228.65.
The ETF has a beta of 0.98 and standard deviation of 14.38% for the trailing three-year period, making it a medium risk choice in the space. With about 201 holdings, it effectively diversifies company-specific risk.
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 Mid Cap ETFs 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 $8.04 B in assets, iShares Russell Mid-Cap Growth ETF has $9.15 B. IJK has an expense ratio of 0.25% and IWP charges 0.25%.
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.
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ISHARS-MO MC GR (JKH): ETF Research Reports
O'Reilly Automotive, Inc. (ORLY) : Free Stock Analysis Report
ISHARS-RS M GR (IWP): ETF Research Reports
Rockwell Automation, Inc. (ROK) : Free Stock Analysis Report
Align Technology, Inc. (ALGN) : Free Stock Analysis Report
ISHARS-SP MC GR (IJK): ETF Research Reports
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