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Should iShares Russell 2000 Value ETF (IWN) Be on Your Investing Radar?

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·4 min read
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If you're interested in broad exposure to the Small Cap Value segment of the US equity market, look no further than the iShares Russell 2000 Value ETF (IWN), a passively managed exchange traded fund launched on 07/24/2000.

The fund is sponsored by Blackrock. It has amassed assets over $12.12 billion, making it one of the largest ETFs attempting to match the Small Cap Value segment of the US equity market.

Why Small Cap Value

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.

Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. While value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value stocks in strong bull markets.

Costs

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 0.24%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.77%.

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 Financials sector--about 26.80% of the portfolio. Industrials and Real Estate round out the top three.

Looking at individual holdings, Ovintiv Inc (OVV) accounts for about 0.73% of total assets, followed by Amc Entertainment Holdings Inc Cla (AMC) and Tenet Healthcare Corp (THC).

The top 10 holdings account for about 5.12% of total assets under management.

Performance and Risk

IWN seeks to match the performance of the Russell 2000 Value Index before fees and expenses. The Russell 2000 Value Index measures the performance of the small-capitalization value sector of the U.S. equity market.

The ETF has lost about -13.05% so far this year and is down about -9.32% in the last one year (as of 05/24/2022). In the past 52-week period, it has traded between $140.57 and $176.88.

The ETF has a beta of 1.15 and standard deviation of 31.34% for the trailing three-year period, making it a medium risk choice in the space. With about 1444 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares Russell 2000 Value 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, IWN is an excellent option for investors seeking exposure to the Style Box - Small Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.

The iShares S&P SmallCap 600 Value ETF (IJS) and the Vanguard SmallCap Value ETF (VBR) track a similar index. While iShares S&P SmallCap 600 Value ETF has $8.21 billion in assets, Vanguard SmallCap Value ETF has $23.99 billion. IJS has an expense ratio of 0.18% and VBR charges 0.07%.

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 Russell 2000 Value ETF (IWN): ETF Research Reports
 
Tenet Healthcare Corporation (THC) : Free Stock Analysis Report
 
AMC Entertainment Holdings, Inc. (AMC) : Free Stock Analysis Report
 
Vanguard SmallCap Value ETF (VBR): ETF Research Reports
 
iShares S&P SmallCap 600 Value ETF (IJS): ETF Research Reports
 
Ovintiv Inc. (OVV) : Free Stock Analysis Report
 
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