Designed to provide broad exposure to the Mid Cap Value segment of the US equity market, the iShares Morningstar MidCap Value ETF (JKI) is a passively managed exchange traded fund launched on 06/28/2004.
The fund is sponsored by Blackrock. It has amassed assets over $328.80 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 have market capitalization between $2 billion and $10 billion. They usually have higher growth prospects than large cap companies and are less volatile than small cap companies. Thus they have a nice balance of growth potential and stability.
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.
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 0.30%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 3.52%.
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 19.60% of the portfolio. Utilities and Industrials round out the top three.
Looking at individual holdings, Eversource Energy (ES) accounts for about 1.51% of total assets, followed by Travelers Companies Inc (TRV) and Kroger (KR).
The top 10 holdings account for about 13.9% 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 -22.22% so far this year and is down about -15.78% in the last one year (as of 07/21/2020). In the past 52-week period, it has traded between $91.54 and $170.57.
The ETF has a beta of 1.16 and standard deviation of 25.35% for the trailing three-year period, making it a medium risk choice in the space. With about 170 holdings, it effectively diversifies company-specific risk.
IShares Morningstar MidCap 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 good 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 MidCap Value ETF (VOE) and the iShares Russell MidCap Value ETF (IWS) track a similar index. While Vanguard MidCap Value ETF has $8.71 billion in assets, iShares Russell MidCap Value ETF has $9.67 billion. VOE has an expense ratio of 0.07% and IWS charges 0.24%.
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.
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iShares Morningstar MidCap Value ETF (JKI): ETF Research Reports
The Travelers Companies, Inc. (TRV): Free Stock Analysis Report
The Kroger Co. (KR): Free Stock Analysis Report
Eversource Energy (ES): Free Stock Analysis Report
Vanguard MidCap Value ETF (VOE): ETF Research Reports
iShares Russell MidCap Value ETF (IWS): 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.