Should iShares Morningstar Small-Cap Value ETF (JKL) Be on Your Investing Radar?

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

The fund is sponsored by Blackrock. It has amassed assets over $343.17 M, making it one of the average sized ETFs attempting to match the Small Cap Value segment of the US equity market.

Why Small Cap Value

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.

Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their lower than average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.


Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining 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 2.49%.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. 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 28.30% of the portfolio. Consumer Discretionary and Real Estate round out the top three.

Looking at individual holdings, Dun & Bradstreet Corp (DNB) accounts for about 1.04% of total assets, followed by Epr Properties Reit (EPR) and Popular Inc (BPOP).

The top 10 holdings account for about 9.01% of total assets under management.

Performance and Risk

JKL seeks to match the performance of the Morningstar Small Value Index before fees and expenses. The Morningstar Small Value Index measures the performance of stocks issued by small-capitalization companies.

The ETF has lost about -17.50% so far this year and is down about -17.59% in the last one year (as of 12/31/2018). In the past 52-week period, it has traded between $117.04 and $158.92.

The ETF has a beta of 1.07 and standard deviation of 15.65% for the trailing three-year period, making it a medium risk choice in the space. With about 233 holdings, it effectively diversifies company-specific risk.


IShares Morningstar Small-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, JKL is a reasonable option for those seeking exposure to the Style Box - Small Cap Value area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Russell 2000 Value ETF (IWN) and the Vanguard Small-Cap Value ETF (VBR) track a similar index. While iShares Russell 2000 Value ETF has $8.68 B in assets, Vanguard Small-Cap Value ETF has $11.33 B. IWN has an expense ratio of 0.24% and VBR charges 0.07%.


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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ISHARS-MO SC VL (JKL): ETF Research Reports

Dun & Bradstreet Corporation (The) (DNB): Free Stock Analysis Report

Popular, Inc. (BPOP): Free Stock Analysis Report

VIPERS-SC VALUE (VBR): ETF Research Reports

ISHARS-RS 2K VL (IWN): ETF Research Reports

EPR Properties (EPR): 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.

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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