Should iShares Morningstar Small-Cap ETF (JKJ) Be on Your Investing Radar?
Looking for broad exposure to the Small Cap Blend segment of the US equity market? You should consider the iShares Morningstar Small-Cap ETF (JKJ), a passively managed exchange traded fund launched on 06/28/2004.
The fund is sponsored by Blackrock. It has amassed assets over $258.46 M, making it one of the average sized ETFs attempting to match the Small Cap Blend segment of the US equity market.
Why Small Cap Blend
Sitting at a market capitalization below $2 billion, small cap companies tend to be high-potential stocks compared to its large and mid cap counterparts, but come with higher risk.
Blend ETFs are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.
Costs
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.25%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.32%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Industrials sector--about 20% of the portfolio. Financials and Real Estate round out the top three.
Looking at individual holdings, Molina Healthcare Inc (MOH) accounts for about 1.40% of total assets, followed by Haemonetics Corp (HAE) and Pbf Energy Inc Class A (PBF).
The top 10 holdings account for about 8.47% of total assets under management.
Performance and Risk
JKJ seeks to match the performance of the Morningstar Small Core Index before fees and expenses. The Morningstar Small Core Index measures the performance of stocks issued by small-capitalization companies.
The ETF return is roughly 3.35% so far this year and was up about 7.15% in the last one year (as of 10/04/2018). In the past 52-week period, it has traded between $164.29 and $186.23.
The ETF has a beta of 1.01 and standard deviation of 13.93% for the trailing three-year period, making it a medium risk choice in the space. With about 262 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares Morningstar Small-Cap 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, JKJ is a sufficient option for those seeking exposure to the Small Cap ETFs area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Core S&P Small-Cap ETF (IJR) and the iShares Russell 2000 ETF (IWM) track a similar index. While iShares Core S&P Small-Cap ETF has $45.93 B in assets, iShares Russell 2000 ETF has $49.21 B. IJR has an expense ratio of 0.07% and IWM charges 0.19%.
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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ISHARS-MO SC (JKJ): ETF Research Reports
ISHARS-R 2000 (IWM): ETF Research Reports
ISHARS-SP SC600 (IJR): ETF Research Reports
Haemonetics Corporation (HAE) : Free Stock Analysis Report
Molina Healthcare, Inc (MOH) : Free Stock Analysis Report
PBF Energy Inc. (PBF) : Free Stock Analysis Report
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