Should iShares Morningstar Small-Cap Value ETF (JKL) 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 Morningstar Small-Cap Value ETF (JKL), a passively managed exchange traded fund launched on 06/28/2004.

The fund is sponsored by Blackrock. It has amassed assets over $450.43 M, 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

There's a lot of potential to investing in small cap companies, but with market capitalization below $2 billion, that high potential comes with even higher risk.

Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.


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 0.30%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.85%.

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 22.60% of the portfolio. Consumer Discretionary and Industrials round out the top three.

Looking at individual holdings, Us Steel Corp Corp (X) accounts for about 1.11% of total assets, followed by Validus Holdings Ltd (VR) and Transocean Ltd (RIG).

The top 10 holdings account for about 8.8% of total assets under management.

Performance and Risk

JKL seeks to match the performance of the Morningstar Small Value Index before fees and expenses. The Morningstar Small Value Index measures the performance of stocks issued by small-capitalization companies.

The ETF has lost about -4.20% so far this year and was up about 4.66% in the last one year (as of 05/05/2018). In the past 52-week period, it has traded between $134.95 and $157.70.

The ETF has a beta of 1.10 and standard deviation of 15.76% for the trailing three-year period, making it a medium risk choice in the space. With about 244 holdings, it effectively diversifies company-specific risk.


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, JKL is a reasonable option for those seeking exposure to the Small Cap ETFs area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Russell 2000 Value ETF (IWN) and the Vanguard Small-Cap Value ETF (VBR) track a similar index. While iShares Russell 2000 Value ETF has $9.28 B in assets, Vanguard Small-Cap Value ETF has $12.86 B. IWN has an expense ratio of 0.24% and VBR charges 0.07%.


An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they 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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ISHARS-MO SC VL (JKL): ETF Research Reports

VIPERS-SC VALUE (VBR): ETF Research Reports

ISHARS-RS 2K VL (IWN): ETF Research Reports

Validus Holdings, Ltd. (VR): Free Stock Analysis Report

Transocean Ltd. (RIG): Free Stock Analysis Report

United States Steel Corporation (X): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Stocks
Referenced Symbols: JKL , VBR , IWN , RIG

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