Should iShares S&P Small-Cap 600 Growth ETF (IJT) Be on Your Investing Radar?

Launched on 07/24/2000, the iShares S&P Small-Cap 600 Growth ETF (IJT) is a passively managed exchange traded fund designed to provide a broad exposure to the Small Cap Growth segment of the US equity market.

The fund is sponsored by Blackrock. It has amassed assets over $5.87 billion, making it one of the larger ETFs attempting to match the Small Cap Growth segment of the US equity market.

Why Small Cap Growth

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.

While growth stocks do boast higher than average sales and earnings growth rates, and they are expected to grow faster than the wider market, investors should note these kinds of stocks have higher valuations. Also, growth stocks are a type of equity that carries more risk compared to others. Compared to value stocks, growth stocks are a safer bet in a strong bull market, but don't perform as strongly in almost all other financial environments.

Costs

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 0.18%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.92%.

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 Industrials sector--about 19.60% of the portfolio. Consumer Discretionary and Information Technology round out the top three.

Looking at individual holdings, Fabrinet (FN) accounts for about 1.18% of total assets, followed by Ensign Group Inc (ENSG) and Abercrombie And Fitch Class A (ANF).

The top 10 holdings account for about 10.69% of total assets under management.

Performance and Risk

IJT seeks to match the performance of the S&P SmallCap 600 Growth Index before fees and expenses. The S&P SmallCap 600 Growth Index measures the performance of the small-capitalization growth sector of the U.S. equity market.

The ETF has added roughly 4.30% so far this year and is up about 20.82% in the last one year (as of 05/29/2024). In the past 52-week period, it has traded between $103.08 and $132.20.

The ETF has a beta of 1.10 and standard deviation of 21.60% for the trailing three-year period, making it a medium risk choice in the space. With about 373 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares S&P Small-Cap 600 Growth 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, IJT is a good option for those seeking exposure to the Style Box - Small Cap Growth area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Russell 2000 Growth ETF (IWO) and the Vanguard Small-Cap Growth ETF (VBK) track a similar index. While iShares Russell 2000 Growth ETF has $11.02 billion in assets, Vanguard Small-Cap Growth ETF has $16.90 billion. IWO has an expense ratio of 0.24% and VBK charges 0.07%.

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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iShares S&P Small-Cap 600 Growth ETF (IJT): ETF Research Reports

Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report

Fabrinet (FN) : Free Stock Analysis Report

The Ensign Group, Inc. (ENSG) : Free Stock Analysis Report

iShares Russell 2000 Growth ETF (IWO): ETF Research Reports

Vanguard Small-Cap Growth ETF (VBK): ETF Research Reports

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Zacks Investment Research

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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