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Should iShares Morningstar Mid-Cap Growth ETF (JKH) Be on Your Investing Radar?

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If you're interested in broad exposure to the Mid Cap Growth segment of the US equity market, look no further than the iShares Morningstar Mid-Cap Growth ETF (JKH), a passively managed exchange traded fund launched on 06/28/2004.

The fund is sponsored by Blackrock. It has amassed assets over $307.39 M, making it one of the average sized ETFs attempting to match the Mid Cap Growth segment of the US equity market.

Why Mid Cap Growth

Mid cap companies, with market capitalization in the range of $2 billion and $10 billion, offer investors many things that small and large companies don't, including less risk and higher growth opportunities. These types of companies, then, have a good balance of stability and growth potential.

Qualities of growth stocks include faster growth rates compared to the broader market, as well as higher valuations and higher than average sales and earnings growth rates. Something to keep in mind is the higher level of volatility that is affiliated with growth stocks. Even though growth stocks are more likely to outperform their value counterparts in strong bull markets, value stocks have a record of delivering better returns in almost all markets than growth stocks.

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain 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 0.35%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Information Technology sector--about 25.70% of the portfolio. Healthcare and Industrials round out the top three.

Looking at individual holdings, Oreilly Automotive Inc (ORLY) accounts for about 1.48% of total assets, followed by Align Technology Inc (ALGN) and Advanced Micro Devices Inc (AMD).

The top 10 holdings account for about 11.57% of total assets under management.

Performance and Risk

JKH seeks to match the performance of the Morningstar Mid Growth Index before fees and expenses. The Morningstar Mid Growth Index measures the performance of stocks issued by mid-capitalization companies. The Morningstar index methodology defines mid-capitalization stocks as those stocks that form the 20% of market capitalization between the 70th and 90th percentile of the market capitalization of the stocks eligible to be included in the Morningstar US Market Index.

The ETF return is roughly 4.94% so far this year and is up about 9.91% in the last one year (as of 10/24/2018). In the past 52-week period, it has traded between $192.38 and $237.43.

The ETF has a beta of 1 and standard deviation of 13.56% for the trailing three-year period, making it a medium risk choice in the space. With about 202 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares Morningstar Mid-Cap Growth ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, JKH is an outstanding option for investors seeking exposure to the Mid Cap ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.

The iShares S&P Mid-Cap 400 Growth ETF (IJK) and the iShares Russell Mid-Cap Growth ETF (IWP) track a similar index. While iShares S&P Mid-Cap 400 Growth ETF has $7.33 B in assets, iShares Russell Mid-Cap Growth ETF has $8.52 B. IJK has an expense ratio of 0.25% and IWP charges 0.25%.

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 .

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

ISHARS-MO MC GR (JKH): ETF Research Reports

O'Reilly Automotive, Inc. (ORLY): Free Stock Analysis Report

Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report

ISHARS-RS M GR (IWP): ETF Research Reports

Align Technology, Inc. (ALGN): Free Stock Analysis Report

ISHARS-SP MC GR (IJK): ETF Research Reports

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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.


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

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