Designed to provide broad exposure to the Mid Cap Value segment of the US equity market, the iShares Morningstar Mid-Cap Value ETF (JKI) is a passively managed exchange traded fund launched on 06/28/2004.
The fund is sponsored by Blackrock. It has amassed assets over $430.16 M, making it one of the average sized ETFs attempting to match the Mid Cap Value segment of the US equity market.
Why Mid Cap Value
Mid cap companies have market capitalization between $2 billion and $10 billion. They usually have higher growth prospects than large cap companies and are less volatile than small cap companies. These types of companies, then, have a good balance of stability and growth potential.
Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their 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 0.30%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.44%.
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 Financials sector--about 21.50% of the portfolio. Utilities and Consumer Discretionary round out the top three.
Looking at individual holdings, Welltower Inc (WELL) accounts for about 1.63% of total assets, followed by Wec Energy Group Inc (WEC) and Paccar Inc (PCAR).
The top 10 holdings account for about 13% of total assets under management.
Performance and Risk
JKI seeks to match the performance of the Morningstar Mid Value Index before fees and expenses. The Morningstar Mid Value Index measures the performance of stocks issued by mid-capitalization companies.
The ETF has added roughly 6.86% so far this year and is down about -8.94% in the last one year (as of 01/23/2019). In the past 52-week period, it has traded between $132.21 and $168.36.
The ETF has a beta of 0.94 and standard deviation of 13.29% for the trailing three-year period, making it a medium risk choice in the space. With about 186 holdings, it effectively diversifies company-specific risk.
IShares Morningstar Mid-Cap Value ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, JKI is an excellent option for investors seeking exposure to the Style Box - Mid Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Vanguard Mid-Cap Value ETF (VOE) and the iShares Russell Mid-Cap Value ETF (IWS) track a similar index. While Vanguard Mid-Cap Value ETF has $8.39 B in assets, iShares Russell Mid-Cap Value ETF has $10.70 B. VOE has an expense ratio of 0.07% and IWS charges 0.25%.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are 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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WEC Energy Group, Inc. (WEC) : Free Stock Analysis Report
iShares Russell Mid-Cap Value ETF (IWS): ETF Research Reports
Vanguard Mid-Cap Value ETF (VOE): ETF Research Reports
Welltower Inc. (WELL) : Free Stock Analysis Report
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