The iShares Morningstar Small-Cap Value ETF (ISCV Quick QuoteISCV - Free Report) was launched on 06/28/2004, and is a passively managed exchange traded fund designed to offer broad exposure to the Small Cap Value segment of the US equity market.

The fund is sponsored by Blackrock. It has amassed assets over $427.74 million, making it one of the average sized 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 have lower than average price-to-earnings and price-to-book ratios. They also have lower than average sales and earnings growth rates. Considering long-term performance, value stocks have outperformed growth stocks in almost all markets; however, they are more likely to underperform growth stocks in strong bull markets.

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 0.06%, making it the least expensive products in the space.

It has a 12-month trailing dividend yield of 2.01%.

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 Financials sector--about 27.50% of the portfolio. Consumer Discretionary and Industrials round out the top three.

Looking at individual holdings, Ch Robinson Worldwide Inc (CHRW Quick QuoteCHRW - Free Report) accounts for about 0.54% of total assets, followed by East West Bancorp Inc (EWBC Quick QuoteEWBC - Free Report) and Assurant Inc (AIZ Quick QuoteAIZ - Free Report) .

The top 10 holdings account for about 4.58% of total assets under management.

Performance and Risk

ISCV seeks to match the performance of the MORNINGSTAR US SML CP BRD VLUE EXTD INDX before fees and expenses. The Morningstar US Small Cap Broad Value Extended Index comprises of small-capitalization U.S. equities that exhibit value characteristics.

The ETF has added roughly 7.73% so far this year and was up about 28.14% in the last one year (as of 10/07/2024). In the past 52-week period, it has traded between $47.77 and $64.15.

The ETF has a beta of 1.24 and standard deviation of 21.22% for the trailing three-year period. With about 1129 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares Morningstar Small-Cap Value 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, ISCV is a reasonable option for those seeking exposure to the Style Box - Small Cap Value area of the market. Investors might also want to consider some other ETF options in the space.

The Avantis U.S. Small Cap Value ETF (AVUV Quick QuoteAVUV - Free Report) and the Vanguard Small-Cap Value ETF (VBR Quick QuoteVBR - Free Report) track a similar index. While Avantis U.S. Small Cap Value ETF has $13.75 billion in assets, Vanguard Small-Cap Value ETF has $30.57 billion. AVUV has an expense ratio of 0.25% and VBR 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.