The iShares Russell 2000 Value ETF (IWN) was launched on 07/24/2000, 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 $12.43 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
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.
Carrying lower than average price-to-earnings and price-to-book ratios, value stocks 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.
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 0.23%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.99%.
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 30.40% of the portfolio. Industrials and Real Estate round out the top three.
Looking at individual holdings, Southstate Corp (SSB) accounts for about 0.49% of total assets, followed by Rbc Bearings Inc (ROLL) and Stag Industrial Reit Inc (STAG).
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 -11.93% so far this year and is down about -9.32% in the last one year (as of 11/30/2022). In the past 52-week period, it has traded between $128.93 and $169.21.
The ETF has a beta of 1.15 and standard deviation of 32.50% for the trailing three-year period, making it a medium risk choice in the space. With about 1405 holdings, it effectively diversifies company-specific risk.
IShares Russell 2000 Value ETF holds a Zacks ETF Rank of 1 (Strong 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 $7.09 billion in assets, Vanguard SmallCap Value ETF has $24.48 billion. IJS has an expense ratio of 0.18% 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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