The iShares Morningstar Small-Cap Value ETF (JKL) was launched on 06/28/2004, and is a passively managed exchange traded fund designed to offer broad exposure to the Small Cap Value segment of the US equity market.
The fund is sponsored by Blackrock. It has amassed assets over $227.78 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
Small cap companies have market capitalization below $2 billion. They usually have higher potential than large and mid cap companies with stocks but higher risk.
Value stocks have lower than average price-to-earnings and price-to-book ratios. They also have lower than average sales and earnings growth rates. Considering long-term performance, value stocks have outperformed growth stocks in almost all markets; however, they are more likely to underperform growth stocks in strong bull markets.
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
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 3.23%.
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 31.10% of the portfolio. Consumer Discretionary and Industrials round out the top three.
Looking at individual holdings, Prosperity Bancshares Inc (PB) accounts for about 0.95% of total assets, followed by Ralph Lauren Corp Class A (RL) and Jabil Inc (JBL).
The top 10 holdings account for about 7.87% 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 -43.36% so far this year and is down about -39.35% in the last one year (as of 03/20/2020). In the past 52-week period, it has traded between $76.90 and $145.02.
The ETF has a beta of 1.18 and standard deviation of 21.59% for the trailing three-year period, making it a medium risk choice in the space. With about 248 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 sufficient 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 $5.83 B in assets, Vanguard Small-Cap Value ETF has $9.02 B. IWN has an expense ratio of 0.24% and VBR charges 0.07%.
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 Morningstar Small-Cap Value ETF (JKL): ETF Research Reports
Ralph Lauren Corporation (RL) : Free Stock Analysis Report
Jabil, Inc. (JBL) : Free Stock Analysis Report
Prosperity Bancshares, Inc. (PB) : Free Stock Analysis Report
Vanguard Small-Cap Value ETF (VBR): ETF Research Reports
iShares Russell 2000 Value ETF (IWN): ETF Research Reports
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