Should iShares Russell Top 200 Growth ETF (IWY) Be on Your Investing Radar?

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Looking for broad exposure to the Large Cap Growth segment of the US equity market? You should consider the iShares Russell Top 200 Growth ETF (IWY), a passively managed exchange traded fund launched on 09/22/2009.

– Zacks

The fund is sponsored by Blackrock. It has amassed assets over $4.67 billion, making it one of the larger ETFs attempting to match the Large Cap Growth segment of the US equity market.

Why Large Cap Growth

Companies that fall in the large cap category tend to have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.

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. Even though growth stocks are more likely to outperform their value counterparts in strong bull markets, value stocks have a record of delivering better returns in almost all markets than growth stocks.

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 0.20%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.53%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Information Technology sector–about 45.70% of the portfolio. Consumer Discretionary and Telecom round out the top three.

Looking at individual holdings, Apple Inc (AAPL) accounts for about 12.71% of total assets, followed by Microsoft Corp (MSFT) and Amazon Com Inc (AMZN).

The top 10 holdings account for about 56.15% of total assets under management.

Performance and Risk

IWY seeks to match the performance of the Russell Top 200 Growth Index before fees and expenses. The Russell Top 200 Growth Index is a style factor weighted index that measures the performance of the largest capitalization growth sector of the U.S. equity market. It is a subset of the Russell Top 200 Index issuers with relatively higher price-to-book ratios and higher forecasted growth, which measures the performance of the largest capitalization sector of the U.S. equity market.

The ETF has added about 30.78% so far this year and was up about 34.88% in the last one year (as of 11/09/2021). In the past 52-week period, it has traded between $123.30 and $170.95.

The ETF has a beta of 1.01 and standard deviation of 24.22% for the trailing three-year period, making it a medium risk choice in the space. With about 114 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares Russell Top 200 Growth 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, IWY is a great option for investors seeking exposure to the Style Box – Large Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.

The Vanguard Growth ETF (VUG) and the Invesco QQQ (QQQ) track a similar index. While Vanguard Growth ETF has $90.41 billion in assets, Invesco QQQ has $206.66 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.

Bottom-Line

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also 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 Top 200 Growth ETF (IWY): ETF Research Reports

Amazon.com, Inc. (AMZN): Free Stock Analysis Report

Apple Inc. (AAPL): Free Stock Analysis Report

Microsoft Corporation (MSFT): Free Stock Analysis Report

Invesco QQQ (QQQ): ETF Research Reports

Vanguard Growth ETF (VUG): ETF Research Reports

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