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Should iShares Morningstar Mid-Cap Value ETF (IMCV) Be on Your Investing Radar?

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

The fund is sponsored by Blackrock. It has amassed assets over $682.35 million, making it one of the average sized ETFs attempting to match the Mid Cap Value segment of the US equity market.

Why Mid Cap Value

Compared to large and small cap companies, mid cap businesses tend to have higher growth prospects and are less volatile, respectively, with market capitalization between $2 billion and $10 billion. Thus they have a nice balance of growth potential and stability.

While 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. 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

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

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 2.11%.

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 19.40% of the portfolio. Utilities and Industrials round out the top three.

Looking at individual holdings, Williams Inc (WMB - Free Report) accounts for about 1.18% of total assets, followed by Capital One Financial Corp (COF - Free Report) and General Motors (GM - Free Report) .

The top 10 holdings account for about 10.58% of total assets under management.

Performance and Risk

IMCV seeks to match the performance of the MORNINGSTAR US MID CAP BROAD VALUE INDEX before fees and expenses. The Morningstar US Mid Cap Broad Value Index comprises of mid-capitalization U.S. equities that exhibit value characteristics.

The ETF return is roughly 21.06% so far this year and is up about 31.33% in the last one year (as of 11/29/2024). In the past 52-week period, it has traded between $63.66 and $81.

The ETF has a beta of 1.08 and standard deviation of 17.34% for the trailing three-year period. With about 310 holdings, it effectively diversifies company-specific risk.

Alternatives

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

The iShares Russell Mid-Cap Value ETF (IWS - Free Report) and the Vanguard Mid-Cap Value ETF (VOE - Free Report) track a similar index. While iShares Russell Mid-Cap Value ETF has $14.38 billion in assets, Vanguard Mid-Cap Value ETF has $18.89 billion. IWS has an expense ratio of 0.23% and VOE 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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