Should iShares Morningstar Small-Cap ETF (ISCB) Be on Your Investing Radar?
Looking for broad exposure to the Small Cap Blend segment of the US equity market? You should consider the iShares Morningstar Small-Cap ETF (ISCB), a passively managed exchange traded fund launched on 06/28/2004.
The fund is sponsored by Blackrock. It has amassed assets over $215.83 million, making it one of the average sized ETFs attempting to match the Small Cap Blend segment of the US equity market.
Why Small Cap Blend
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.
Blend ETFs are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.
Costs
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 0.04%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.38%.
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 Financials sector--about 18.10% of the portfolio. Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Carvana Class A- (CVNA) accounts for about 0.29% of total assets, followed by Texas Roadhouse Inc- (TXRH) and Onto Innovation Inc- (ONTO).
The top 10 holdings account for about 2.64% of total assets under management.
Performance and Risk
ISCB seeks to match the performance of the MORNINGSTAR US SMALL CAP EXTENDED INDEX before fees and expenses. The Morningstar US Small Cap Extended Index comprises of small-capitalization U.S. equities.
The ETF return is roughly 2.32% so far this year and was up about 8.88% in the last one year (as of 08/12/2024). In the past 52-week period, it has traded between $43.13 and $58.51.
The ETF has a beta of 1.16 and standard deviation of 22.06% for the trailing three-year period. With about 1607 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares Morningstar Small-Cap 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, ISCB is a reasonable option for those seeking exposure to the Style Box - Small Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 2000 ETF (IWM) and the iShares Core S&P Small-Cap ETF (IJR) track a similar index. While iShares Russell 2000 ETF has $64.63 billion in assets, iShares Core S&P Small-Cap ETF has $81.75 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.
Bottom-Line
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds 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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Get it free >>iShares Morningstar Small-Cap ETF (ISCB): ETF Research Reports
Texas Roadhouse, Inc. (TXRH) : Free Stock Analysis Report
iShares Russell 2000 ETF (IWM): ETF Research Reports
iShares Core S&P Small-Cap ETF (IJR): ETF Research Reports
Carvana Co. (CVNA) : Free Stock Analysis Report
Onto Innovation Inc. (ONTO) : Free Stock Analysis Report
