If you're interested in broad exposure to the Mid Cap Growth segment of the US equity market, look no further than the iShares Morningstar MidCap Growth ETF (JKH), a passively managed exchange traded fund launched on 06/28/2004.
The fund is sponsored by Blackrock. It has amassed assets over $1.11 billion, making it one of the average sized ETFs attempting to match the Mid Cap Growth segment of the US equity market.
Why Mid Cap Growth
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. These types of companies, then, have a good balance of stability and growth potential.
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. Something to keep in mind is the higher level of volatility that is affiliated with growth stocks. When you consider growth versus value, growth stocks are usually the clear winner in strong bull markets but tend to fall flat in nearly all other environments.
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
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 0.23%.
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 Information Technology sector--about 41.60% of the portfolio. Healthcare and Industrials round out the top three.
Looking at individual holdings, Mercadolibre Inc (MELI) accounts for about 2.27% of total assets, followed by Square Inc Class A (SQ) and Lululemon Athletica Inc (LULU).
The top 10 holdings account for about 16.25% of total assets under management.
Performance and Risk
JKH seeks to match the performance of the Morningstar Mid Growth Index before fees and expenses. The Morningstar Mid Growth Index measures the performance of stocks issued by mid-capitalization companies. The Morningstar index methodology defines mid-capitalization stocks as those stocks that form the 20% of market capitalization between the 70th and 90th percentile of the market capitalization of the stocks eligible to be included in the Morningstar US Market Index.
The ETF has added roughly 17.73% so far this year and it's up approximately 25.36% in the last one year (as of 09/24/2020). In the past 52-week period, it has traded between $188.46 and $335.61.
The ETF has a beta of 1.09 and standard deviation of 23.75% for the trailing three-year period, making it a medium risk choice in the space. With about 166 holdings, it effectively diversifies company-specific risk.
IShares Morningstar MidCap Growth 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, JKH is an excellent option for investors seeking exposure to the Style Box - Mid Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Vanguard MidCap Growth ETF (VOT) and the iShares Russell MidCap Growth ETF (IWP) track a similar index. While Vanguard MidCap Growth ETF has $7.98 billion in assets, iShares Russell MidCap Growth ETF has $12.67 billion. VOT has an expense ratio of 0.07% and IWP charges 0.24%.
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 Morningstar MidCap Growth ETF (JKH): ETF Research Reports
lululemon athletica inc. (LULU) : Free Stock Analysis Report
MercadoLibre, Inc. (MELI) : Free Stock Analysis Report
Square, Inc. (SQ) : Free Stock Analysis Report
iShares Russell MidCap Growth ETF (IWP): ETF Research Reports
Vanguard MidCap Growth ETF (VOT): ETF Research Reports
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