Should iShares S&P SmallCap 600 Growth ETF (IJT) Be on Your Investing Radar?
Launched on 07/24/2000, the iShares S&P SmallCap 600 Growth ETF (IJT) is a passively managed exchange traded fund designed to provide a broad exposure to the Small Cap Growth segment of the US equity market.
The fund is sponsored by Blackrock. It has amassed assets over $5.07 billion, making it one of the larger 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. Additionally, growth stocks have a greater level of risk associated with them. When you consider growth versus value, growth stocks are usually the clear winner in strong bull markets but tend to fall flat in nearly all other environments.
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 0.18%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.82%.
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 Information Technology sector--about 18.60% of the portfolio. Healthcare and Industrials round out the top three.
Looking at individual holdings, Omnicell Inc (OMCL) accounts for about 1.17% of total assets, followed by Ufp Industries Inc (UFPI) and Rogers Corp (ROG).
The top 10 holdings account for about 10.25% of total assets under management.
Performance and Risk
IJT seeks to match the performance of the S&P SmallCap 600 Growth Index before fees and expenses. The S&P SmallCap 600 Growth Index measures the performance of the small-capitalization growth sector of the U.S. equity market.
The ETF has lost about -18.64% so far this year and is down about -13.54% in the last one year (as of 05/02/2022). In the past 52-week period, it has traded between $113.33 and $143.62.
The ETF has a beta of 1.14 and standard deviation of 29.75% for the trailing three-year period, making it a medium risk choice in the space. With about 377 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares S&P SmallCap 600 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, IJT is an outstanding option for investors seeking exposure to the Style Box - Small Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.
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 $9.30 billion in assets, Vanguard SmallCap Growth ETF has $12.81 billion. IWO has an expense ratio of 0.24% and VBK charges 0.07%.
Bottom-Line
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 S&P SmallCap 600 Growth ETF (IJT): ETF Research Reports
UFP Industries, Inc. (UFPI) : Free Stock Analysis Report
Omnicell, Inc. (OMCL) : Free Stock Analysis Report
Rogers Corporation (ROG) : Free Stock Analysis Report
iShares Russell 2000 Growth ETF (IWO): ETF Research Reports
Vanguard SmallCap Growth ETF (VBK): ETF Research Reports
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