Send me real-time posts from this site at my email
Zacks

Should iShares Russell 2000 Value ETF (IWN) Be on Your Investing Radar?

Looking for broad exposure to the Small Cap Value segment of the US equity market? You should consider the iShares Russell 2000 Value ETF (IWN), a passively managed exchange traded fund launched on 07/24/2000.

The fund is sponsored by Blackrock. It has amassed assets over $11.21 billion, making it one of the largest ETFs attempting to match the Small Cap Value segment of the US equity market.

Why Small Cap Value

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.

Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their lower than average sales and earnings growth rates. While 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

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.23%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 2.18%.

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 30.20% of the portfolio. Industrials and Healthcare round out the top three.

Looking at individual holdings, Southstate Corp (SSB) accounts for about 0.49% of total assets, followed by Rbc Bearings Inc (ROLL) and Stag Industrial Reit Inc (STAG).

Performance and Risk

IWN seeks to match the performance of the Russell 2000 Value Index before fees and expenses. The Russell 2000 Value Index measures the performance of the small-capitalization value sector of the U.S. equity market.

The ETF has lost about -19.61% so far this year and is down about -15.84% in the last one year (as of 09/29/2022). In the past 52-week period, it has traded between $129.63 and $176.88.

The ETF has a beta of 1.14 and standard deviation of 31.87% for the trailing three-year period, making it a medium risk choice in the space. With about 1405 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares Russell 2000 Value ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, IWN is an outstanding option for investors seeking exposure to the Style Box - Small Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.

The iShares S&P SmallCap 600 Value ETF (IJS) and the Vanguard SmallCap Value ETF (VBR) track a similar index. While iShares S&P SmallCap 600 Value ETF has $6.21 billion in assets, Vanguard SmallCap Value ETF has $21.37 billion. IJS has an expense ratio of 0.18% and VBR charges 0.07%.

Bottom-Line

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.


Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.

Get it free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
iShares Russell 2000 Value ETF (IWN): ETF Research Reports
 
Stag Industrial, Inc. (STAG): Free Stock Analysis Report
 
RBC Bearings Incorporated (ROLL): Free Stock Analysis Report
 
Vanguard SmallCap Value ETF (VBR): ETF Research Reports
 
SouthState Corp. (SSB): Free Stock Analysis Report
 
iShares S&P SmallCap 600 Value ETF (IJS): ETF Research Reports
 
To read this article on Zacks.com click here.
 
Zacks Investment Research

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue