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

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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 - Free Report) , a passively managed exchange traded fund launched on 07/24/2000.

The fund is sponsored by Blackrock. It has amassed assets over $12.02 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 0.24%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 1.95%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. 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 25.60% of the portfolio. Industrials and Consumer Discretionary round out the top three.

Looking at individual holdings, Chord Energy Corp (CHRD - Free Report) accounts for about 0.55% of total assets, followed by Permian Resources Corp Class A (PR - Free Report) and Commercial Metals (CMC - Free Report) .

The top 10 holdings account for about 4.95% of total assets under management.

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 added roughly 0.56% so far this year and is up about 20.10% in the last one year (as of 05/08/2024). In the past 52-week period, it has traded between $125.51 and $158.81.

The ETF has a beta of 1.16 and standard deviation of 21.86% for the trailing three-year period, making it a medium risk choice in the space. With about 1427 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares Russell 2000 Value 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, IWN is a great 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 Avantis U.S. Small Cap Value ETF (AVUV - Free Report) and the Vanguard Small-Cap Value ETF (VBR - Free Report) track a similar index. While Avantis U.S. Small Cap Value ETF has $11.12 billion in assets, Vanguard Small-Cap Value ETF has $28.24 billion. AVUV has an expense ratio of 0.25% 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.

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