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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 $5.66 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

With more potential comes more risk, and small cap companies, with market capitalization below $2 billion, epitomizes this way of thinking.

Qualities of growth stocks include faster growth rates compared to the broader market, as well as higher valuations and higher than average sales and earnings growth rates. Further, growth stocks have a higher level of volatility associated with them. 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.

Costs

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 0.18%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.70%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Information Technology sector--about 20.90% of the portfolio. Healthcare and Industrials round out the top three.

Looking at individual holdings, Omnicell Inc (OMCL) accounts for about 1.49% of total assets, followed by Chart Industries Inc (GTLS) and Innovative Industrial Properties I (IIPR).

The top 10 holdings account for about 2.77% 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 -10.32% so far this year and is down about -0.53% in the last one year (as of 03/01/2022). In the past 52-week period, it has traded between $119.16 and $143.62.

The ETF has a beta of 1.15 and standard deviation of 29.36% for the trailing three-year period, making it a medium risk choice in the space. With about 348 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 a great 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 $10.46 billion in assets, Vanguard SmallCap Growth ETF has $14.17 billion. IWO has an expense ratio of 0.24% and VBK 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.


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iShares S&P SmallCap 600 Growth ETF (IJT): ETF Research Reports
 
Omnicell, Inc. (OMCL): Free Stock Analysis Report
 
Chart Industries, Inc. (GTLS): Free Stock Analysis Report
 
iShares Russell 2000 Growth ETF (IWO): ETF Research Reports
 
Vanguard SmallCap Growth ETF (VBK): ETF Research Reports
 
Innovative Industrial Properties, Inc. (IIPR): Free Stock Analysis Report
 
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