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Looking for broad exposure to the Small Cap Growth segment of the US equity market? You should consider the iShares Morningstar SmallCap Growth ETF (ISCG), a passively managed exchange traded fund launched on 06/28/2004.
The fund is sponsored by Blackrock. It has amassed assets over $342.91 million, making it one of the average sized ETFs attempting to match the Small Cap Growth segment of the US equity market.
Why Small Cap Growth
There's a lot of potential to investing in small cap companies, but with market capitalization below $2 billion, that high potential comes with even higher risk.
Growth stocks have higher than average sales and earnings growth rates. While these are expected to grow faster than the broader market, they also have higher valuations. Also, growth stocks are a type of equity that carries more risk compared to others. 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.
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
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 0.92%.
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 Healthcare sector--about 23.40% of the portfolio. Information Technology and Industrials round out the top three.
Looking at individual holdings, Willscot Mobile Mini Holdings Corp (WSC) accounts for about 0.52% of total assets, followed by Wyndham Hotels Resorts Inc (WH) and Eastgroup Properties Reit Inc (EGP).
The top 10 holdings account for about 4.54% of total assets under management.
Performance and Risk
ISCG seeks to match the performance of the MORNINGSTAR US SML CP BRD GRWTH EXTD ID before fees and expenses. The Morningstar US Small Cap Broad Growth Extended Index comprises of small-capitalization U.S. equities that exhibit growth characteristics.
The ETF has lost about -28.47% so far this year and is down about -30.31% in the last one year (as of 07/05/2022). In the past 52-week period, it has traded between $33.74 and $54.51.
The ETF has a beta of 1.09 and standard deviation of 29.40% for the trailing three-year period. With about 1181 holdings, it effectively diversifies company-specific risk.
IShares Morningstar SmallCap Growth 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, ISCG is a reasonable option for those seeking exposure to the Style Box - Small Cap Growth area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 2000 Growth ETF (IWO) and the Vanguard SmallCap Growth ETF (VBK) track a similar index. While iShares Russell 2000 Growth ETF has $8.98 billion in assets, Vanguard SmallCap Growth ETF has $11.78 billion. IWO has an expense ratio of 0.24% and VBK charges 0.07%.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
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 SmallCap Growth ETF (ISCG): ETF Research Reports
WillScot Mobile Mini Holdings Corp. (WSC) : Free Stock Analysis Report
EastGroup Properties, Inc. (EGP) : Free Stock Analysis Report
iShares Russell 2000 Growth ETF (IWO): ETF Research Reports
Vanguard SmallCap Growth ETF (VBK): ETF Research Reports
Wyndham Hotels & Resorts (WH) : Free Stock Analysis Report
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