Should iShares Russell 2000 ETF (IWM) Be on Your Investing Radar?
The iShares Russell 2000 ETF (IWM) was launched on 05/22/2000, and is a passively managed exchange traded fund designed to offer broad exposure to the Small Cap Blend segment of the US equity market.
The fund is sponsored by Blackrock. It has amassed assets over $69.85 billion, making it one of the largest ETFs attempting to match the Small Cap Blend segment of the US equity market.
Why Small Cap Blend
Sitting at a market capitalization below $2 billion, small cap companies tend to be high-potential stocks compared to its large and mid cap counterparts, but come with 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 0.19%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.20%.
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 18.10% of the portfolio. Healthcare and Industrials round out the top three.
Looking at individual holdings, Insmed Inc (INSM) accounts for about 0.44% of total assets, followed by Ftai Aviation Ltd (FTAI) and Sprouts Farmers Market Inc (SFM).
The top 10 holdings account for about 3.39% of total assets under management.
Performance and Risk
IWM seeks to match the performance of the Russell 2000 Index before fees and expenses. The Russell 2000 Index measures the performance of the small capitalization sector of the U.S. equity market.
The ETF has gained about 10.19% so far this year and it's up approximately 16.70% in the last one year (as of 09/03/2024). In the past 52-week period, it has traded between $162.21 and $224.60.
The ETF has a beta of 1.15 and standard deviation of 23.07% for the trailing three-year period, making it a medium risk choice in the space. With about 1987 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares Russell 2000 ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, IWM is a great option for investors seeking exposure to the Style Box - Small Cap Blend segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Vanguard Small-Cap ETF (VB) and the iShares Core S&P Small-Cap ETF (IJR) track a similar index. While Vanguard Small-Cap ETF has $58.65 billion in assets, iShares Core S&P Small-Cap ETF has $86.47 billion. VB has an expense ratio of 0.05% and IJR charges 0.06%.
Bottom-Line
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
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 Russell 2000 ETF (IWM): ETF Research Reports
Insmed, Inc. (INSM) : Free Stock Analysis Report
Sprouts Farmers Market, Inc. (SFM) : Free Stock Analysis Report
FTAI Aviation Ltd. (FTAI) : Free Stock Analysis Report
iShares Core S&P Small-Cap ETF (IJR): ETF Research Reports
Vanguard Small-Cap ETF (VB): ETF Research Reports
