Looking for broad exposure to the Mid Cap Value segment of the US equity market? You should consider the iShares Morningstar MidCap Value ETF (JKI), a passively managed exchange traded fund launched on 06/28/2004.
The fund is sponsored by Blackrock. It has amassed assets over $318.38 million, making it one of the average sized ETFs attempting to match the Mid Cap Value segment of the US equity market.
Why Mid Cap Value
Mid cap companies, with market capitalization in the range of $2 billion and $10 billion, offer investors many things that small and large companies don't, including less risk and higher growth opportunities. Thus they have a nice balance of growth potential and stability.
While 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.
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 3.54%.
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 19.40% of the portfolio. Industrials and Utilities round out the top three.
Looking at individual holdings, Cummins Inc (CMI) accounts for about 1.56% of total assets, followed by Paccar Inc (PCAR) and Johnson Controls International Plc (JCI).
The top 10 holdings account for about 14.37% of total assets under management.
Performance and Risk
JKI seeks to match the performance of the Morningstar Mid Value Index before fees and expenses. The Morningstar Mid Value Index measures the performance of stocks issued by mid-capitalization companies.
The ETF has lost about -22.65% so far this year and is down about -16.73% in the last one year (as of 09/25/2020). In the past 52-week period, it has traded between $91.54 and $170.57.
The ETF has a beta of 1.15 and standard deviation of 25.71% for the trailing three-year period, making it a medium risk choice in the space. With about 168 holdings, it effectively diversifies company-specific risk.
IShares Morningstar MidCap 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, JKI is a reasonable option for those seeking exposure to the Style Box - Mid Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The Vanguard MidCap Value ETF (VOE) and the iShares Russell MidCap Value ETF (IWS) track a similar index. While Vanguard MidCap Value ETF has $8.79 billion in assets, iShares Russell MidCap Value ETF has $9.56 billion. VOE has an expense ratio of 0.07% and IWS charges 0.24%.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds 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 Morningstar MidCap Value ETF (JKI): ETF Research Reports
Cummins Inc. (CMI) : Free Stock Analysis Report
PACCAR Inc. (PCAR) : Free Stock Analysis Report
Johnson Controls International plc (JCI) : Free Stock Analysis Report
Vanguard MidCap Value ETF (VOE): ETF Research Reports
iShares Russell MidCap Value ETF (IWS): ETF Research Reports
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