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Looking for broad exposure to the Mid Cap Value segment of the US equity market? You should consider the iShares Morningstar MidCap Value ETF (JKI), a passively managed exchange traded fund launched on 06/28/2004.
The fund is sponsored by Blackrock. It has amassed assets over $346.45 million, 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
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. Thus they have a nice balance of growth potential and stability.
Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
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 3.28%.
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 18.10% of the portfolio. Utilities and Industrials round out the top three.
Looking at individual holdings, Travelers Companies Inc (JCI) accounts for about 1.54% of total assets, followed by Eversource Energy (ES) and American International Group Inc (AIG).
The top 10 holdings account for about 14.01% 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 lost about -16.62% so far this year and is down about -6.91% in the last one year (as of 09/03/2020). In the past 52-week period, it has traded between $91.54 and $170.57.
The ETF has a beta of 1.15 and standard deviation of 25.53% for the trailing three-year period, making it a medium risk choice in the space. With about 170 holdings, it effectively diversifies company-specific risk.
IShares Morningstar MidCap Value ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, JKI is a reasonable option for those seeking exposure to the Style Box - Mid Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The Vanguard MidCap Value ETF (VOE) and the iShares Russell MidCap Value ETF (IWS) track a similar index. While Vanguard MidCap Value ETF has $9.50 billion in assets, iShares Russell MidCap Value ETF has $10.39 billion. VOE has an expense ratio of 0.07% and IWS 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 Value ETF (JKI): ETF Research Reports
Johnson Controls International plc (JCI) : Free Stock Analysis Report
American International Group, Inc. (AIG) : Free Stock Analysis Report
Eversource Energy (ES) : Free Stock Analysis Report
Vanguard MidCap Value ETF (VOE): ETF Research Reports
iShares Russell MidCap Value ETF (IWS): ETF Research Reports
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