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Designed to provide broad exposure to the Mid Cap Growth segment of the US equity market, the iShares Morningstar MidCap Growth ETF (JKH) is a passively managed exchange traded fund launched on 06/28/2004.
The fund is sponsored by Blackrock. It has amassed assets over $1.07 billion, 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.
Qualities of growth stocks include faster growth rates compared to the broader market, as well as higher valuations and higher than average sales and earnings growth rates. Further, growth stocks have a higher level of volatility associated with them. Even though growth stocks are more likely to outperform their value counterparts in strong bull markets, value stocks have a record of delivering better returns in almost all markets than growth stocks.
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 0.24%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Information Technology sector--about 41.30% of the portfolio. Healthcare and Industrials round out the top three.
Looking at individual holdings, Mercadolibre Inc (MELI) accounts for about 1.93% of total assets, followed by Square Inc Class A (SQ) and Dexcom Inc (DXCM).
The top 10 holdings account for about 15.29% 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 gained about 19.41% so far this year and it's up approximately 25.56% in the last one year (as of 08/11/2020). In the past 52-week period, it has traded between $188.46 and $322.26.
The ETF has a beta of 1.12 and standard deviation of 23.39% for the trailing three-year period, making it a medium risk choice in the space. With about 166 holdings, it effectively diversifies company-specific risk.
IShares Morningstar MidCap Growth 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, JKH is a great 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 Vanguard MidCap Growth ETF (VOT) and the iShares Russell MidCap Growth ETF (IWP) track a similar index. While Vanguard MidCap Growth ETF has $8.17 billion in assets, iShares Russell MidCap Growth ETF has $13.01 billion. VOT has an expense ratio of 0.07% and IWP charges 0.24%.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds 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 MidCap Growth ETF (JKH): ETF Research Reports
DexCom, Inc. (DXCM) : Free Stock Analysis Report
MercadoLibre, Inc. (MELI) : Free Stock Analysis Report
Square, Inc. (SQ) : Free Stock Analysis Report
iShares Russell MidCap Growth ETF (IWP): ETF Research Reports
Vanguard MidCap Growth ETF (VOT): ETF Research Reports
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