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Should iShares Morningstar MidCap ETF (IMCB) Be on Your Investing Radar?

Zacks Equity Research
·3 min read

Designed to provide broad exposure to the Mid Cap Blend segment of the US equity market, the iShares Morningstar MidCap ETF (IMCB) is a passively managed exchange traded fund launched on 06/28/2004.

The fund is sponsored by Blackrock. It has amassed assets over $710.88 million, making it one of the average sized ETFs attempting to match the Mid Cap Blend segment of the US equity market.

Why Mid Cap Blend

With market capitalization between $2 billion and $10 billion, mid cap companies usually contain higher growth prospects than large cap companies, and are considered less risky than their small cap counterparts. Thus they have a nice balance of growth potential and stability.

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Typically holding a combination of both growth and value stocks, blend ETFs also demonstrate qualities seen in value and growth investments.

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.04%, making it the least expensive products in the space.

It has a 12-month trailing dividend yield of 1.55%.

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 14.70% of the portfolio. Information Technology and Financials round out the top three.

Looking at individual holdings, Centene Corp (CNC) accounts for about 0.57% of total assets, followed by Sysco Corp (SYY) and Baxter International Inc (BAX).

The top 10 holdings account for about 4.96% of total assets under management.

Performance and Risk

IMCB seeks to match the performance of the MORNINGSTAR US MID CAP INDEX before fees and expenses. The Morningstar US Mid Cap Index comprises of mid-capitalization U.S. equities.

The ETF has lost about -19.16% so far this year and is down about -13.91% in the last one year (as of 06/30/2022). In the past 52-week period, it has traded between $54.49 and $72.78.

The ETF has a beta of 1.07 and standard deviation of 27.46% for the trailing three-year period. With about 568 holdings, it effectively diversifies company-specific risk.

Alternatives

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

The Vanguard MidCap ETF (VO) and the iShares Core S&P MidCap ETF (IJH) track a similar index. While Vanguard MidCap ETF has $46.67 billion in assets, iShares Core S&P MidCap ETF has $56.28 billion. VO has an expense ratio of 0.04% and IJH charges 0.05%.

Bottom-Line

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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iShares Morningstar MidCap ETF (IMCB): ETF Research Reports
 
Baxter International Inc. (BAX) : Free Stock Analysis Report
 
Sysco Corporation (SYY) : Free Stock Analysis Report
 
Centene Corporation (CNC) : Free Stock Analysis Report
 
iShares Core S&P MidCap ETF (IJH): ETF Research Reports
 
Vanguard MidCap ETF (VO): ETF Research Reports
 
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Zacks Investment Research