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

The iShares Morningstar Mid-Cap Value ETF (JKI) 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 $283.11 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

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.

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. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.

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 4.66%.

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 22% of the portfolio. Utilities and Materials round out the top three.

Looking at individual holdings, Eversource Energy (ES) accounts for about 2.25% of total assets, followed by Kroger (KR) and Mckesson Corp (MCK).

The top 10 holdings account for about 16.99% of total assets under management.

Performance and Risk

JKI seeks to match the performance of the Morningstar Mid Value Index before fees and expenses. The Morningstar Mid Value Index measures the performance of stocks issued by mid-capitalization companies.

The ETF has lost about -39.19% so far this year and is down about -32.74% in the last one year (as of 04/03/2020). In the past 52-week period, it has traded between $91.54 and $170.57.

The ETF has a beta of 1.19 and standard deviation of 21.40% for the trailing three-year period, making it a medium risk choice in the space. With about 184 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, JKI is a sufficient 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 Vanguard Mid-Cap Value ETF (VOE) and the iShares Russell Mid-Cap Value ETF (IWS) track a similar index. While Vanguard Mid-Cap Value ETF has $6.82 billion in assets, iShares Russell Mid-Cap Value ETF has $7.80 billion. VOE has an expense ratio of 0.07% and IWS charges 0.24%.

Bottom-Line

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are 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.

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