If you're interested in broad exposure to the Large Cap Value segment of the US equity market, look no further than the iShares Morningstar Large-Cap Value ETF (JKF), a passively managed exchange traded fund launched on 06/28/2004.
The fund is sponsored by Blackrock. It has amassed assets over $496.11 M, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Large cap companies typically have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.
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. 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.
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 0.25%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.67%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. 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 27.50% of the portfolio. Consumer Staples and Information Technology round out the top three.
Looking at individual holdings, Berkshire Hathaway Inc Class B (BRK.B) accounts for about 6.26% of total assets, followed by Exxon Mobil Corp (XOM) and Jpmorgan Chase & Co (JPM).
The top 10 holdings account for about 43.62% of total assets under management.
Performance and Risk
JKF seeks to match the performance of the Morningstar Large Value Index before fees and expenses. The Morningstar Large Value Index measures the performance of stocks issued by large-capitalization comp that have exhibited value characteristics.
The ETF has added roughly 12.72% so far this year and was up about 7.25% in the last one year (as of 04/17/2019). In the past 52-week period, it has traded between $91.27 and $110.09.
The ETF has a beta of 0.89 and standard deviation of 11.67% for the trailing three-year period, making it a medium risk choice in the space. With about 72 holdings, it effectively diversifies company-specific risk.
IShares Morningstar Large-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, JKF is a reasonable option for those seeking exposure to the Style Box - Large Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 1000 Value ETF (IWD) and the Vanguard Value ETF (VTV) track a similar index. While iShares Russell 1000 Value ETF has $38.88 B in assets, Vanguard Value ETF has $47.42 B. IWD has an expense ratio of 0.20% and VTV charges 0.05%.
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 Morningstar Large-Cap Value ETF (JKF): ETF Research Reports
JPMorgan Chase & Co. (JPM): Free Stock Analysis Report
Vanguard Value ETF (VTV): ETF Research Reports
iShares Russell 1000 Value ETF (IWD): ETF Research Reports
Berkshire Hathaway Inc. (BRK.B): Free Stock Analysis Report
Exxon Mobil Corporation (XOM): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.