Looking for broad exposure to the Small Cap Growth segment of the US equity market? You should consider the iShares Morningstar SmallCap Growth ETF (JKK), a passively managed exchange traded fund launched on 06/28/2004.
The fund is sponsored by Blackrock. It has amassed assets over $242.16 million, making it one of the average sized ETFs attempting to match the Small Cap Growth segment of the US equity market.
Why Small Cap Growth
With more potential comes more risk, and small cap companies, with market capitalization below $2 billion, epitomizes this way of thinking.
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. They are likely to outperform value stocks in strong bull markets but over the longer-term, value stocks have delivered better returns than growth stocks in almost all markets.
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 0.26%.
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 Information Technology sector--about 26% of the portfolio. Healthcare and Consumer Discretionary round out the top three.
Looking at individual holdings, Match Group Inc (MTCH) accounts for about 2.82% of total assets, followed by Alteryx Inc Class A (AYX) and Quidel Corp (QDEL).
The top 10 holdings account for about 11.73% of total assets under management.
Performance and Risk
JKK seeks to match the performance of the Morningstar Small Growth Index before fees and expenses. The Morningstar Small Growth Index measures the performance of stocks issued by small-capitalization companies.
The ETF has gained about 8.93% so far this year and it's up approximately 9.93% in the last one year (as of 07/28/2020). In the past 52-week period, it has traded between $142.18 and $230.73.
The ETF has a beta of 1.22 and standard deviation of 25.94% for the trailing three-year period, making it a medium risk choice in the space. With about 241 holdings, it effectively diversifies company-specific risk.
IShares Morningstar SmallCap 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, JKK is an outstanding option for investors seeking exposure to the Style Box - Small Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell 2000 Growth ETF (IWO) and the Vanguard SmallCap Growth ETF (VBK) track a similar index. While iShares Russell 2000 Growth ETF has $8.87 billion in assets, Vanguard SmallCap Growth ETF has $10.94 billion. IWO has an expense ratio of 0.24% and VBK charges 0.07%.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they 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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iShares Morningstar SmallCap Growth ETF (JKK): ETF Research Reports
Quidel Corporation (QDEL): Free Stock Analysis Report
iShares Russell 2000 Growth ETF (IWO): ETF Research Reports
IACInterActiveCorp (MTCH): Free Stock Analysis Report
Vanguard SmallCap Growth ETF (VBK): ETF Research Reports
Alteryx, Inc. (AYX): 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.