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Should iShares Morningstar MidCap Value ETF (IMCV) Be on Your Investing Radar?

Looking for broad exposure to the Mid Cap Value segment of the US equity market? You should consider the iShares Morningstar MidCap Value ETF (IMCV), a passively managed exchange traded fund launched on 06/28/2004.

The fund is sponsored by Blackrock. It has amassed assets over $468.10 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

Compared to large and small cap companies, mid cap businesses tend to have higher growth prospects and are less volatile, respectively, with market capitalization between $2 billion and $10 billion. These types of companies, then, have a good balance of stability and growth potential.

While value stocks have lower than average price-to-earnings and price-to-book ratios, they also have lower than average sales and earnings growth rates. Value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value stocks in strong bull markets.

Costs

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 0.06%, making it the least expensive products in the space.

It has a 12-month trailing dividend yield of 2.14%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Financials sector--about 15.10% of the portfolio. Utilities and Industrials round out the top three.

Looking at individual holdings, Phillips 66 (PSX) accounts for about 1.05% of total assets, followed by Xcel Energy Inc (XEL) and Hp Inc (HPQ).

The top 10 holdings account for about 8.94% of total assets under management.

Performance and Risk

IMCV seeks to match the performance of the MORNINGSTAR US MID CAP BROAD VALUE INDEX before fees and expenses. The Morningstar US Mid Cap Broad Value Index comprises of mid-capitalization U.S. equities that exhibit value characteristics.

The ETF has lost about -8.10% so far this year and is down about -2.74% in the last one year (as of 09/02/2022). In the past 52-week period, it has traded between $57.93 and $70.61.

The ETF has a beta of 1.07 and standard deviation of 28.15% for the trailing three-year period. With about 363 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares Morningstar MidCap 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, IMCV is an outstanding 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 iShares Russell MidCap Value ETF (IWS) and the Vanguard MidCap Value ETF (VOE) track a similar index. While iShares Russell MidCap Value ETF has $12.92 billion in assets, Vanguard MidCap Value ETF has $15.67 billion. IWS has an expense ratio of 0.23% and VOE charges 0.07%.

Bottom-Line

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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iShares Morningstar MidCap Value ETF (IMCV): ETF Research Reports
 
Xcel Energy Inc. (XEL) : Free Stock Analysis Report
 
HP Inc. (HPQ) : Free Stock Analysis Report
 
Phillips 66 (PSX) : 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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Zacks Investment Research