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

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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.

– Zacks

The fund is sponsored by Blackrock. It has amassed assets over $16.97 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

With more potential comes more risk, and small cap companies, with market capitalization below $2 billion, epitomizes this way of thinking.

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. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.

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

It has a 12-month trailing dividend yield of 1.26%.

Sector Exposure and Top Holdings

It is important to delve into an ETF’s holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Financials sector–about 27.10% of the portfolio. Industrials and Real Estate round out the top three.

Looking at individual holdings, Amc Entertainment Holdings Inc Cla (AMC) accounts for about 1.25% of total assets, followed by Ovintiv Inc (OVV) and Macys Inc (M).

The top 10 holdings account for about 5.46% 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 gained about 35.76% so far this year and is up about 54.41% in the last one year (as of 11/15/2021). In the past 52-week period, it has traded between $120.71 and $176.88.

The ETF has a beta of 1.21 and standard deviation of 30.76% for the trailing three-year period, making it a medium risk choice in the space. With about 1428 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 VIPERSSC VALUE (VBR) track a similar index. While iShares S&P SmallCap 600 Value ETF has $9.42 billion in assets, VIPERSSC VALUE has $26.91 billion. IJS has an expense ratio of 0.18% and VBR charges 0.07%.

Bottom-Line

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 Russell 2000 Value ETF (IWN): ETF Research Reports

Macy’s, Inc. (M): 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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