Designed to provide broad exposure to the Small Cap Value segment of the US equity market, the iShares Russell 2000 Value ETF (IWN) is a passively managed exchange traded fund launched on 07/24/2000.
The fund is sponsored by Blackrock. It has amassed assets over $12.37 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.
Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their lower than average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.
Costs
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 0.24%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 1.78%.
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 29.20% of the portfolio. Industrials and Real Estate round out the top three.
Looking at individual holdings, Southstate Corp (SSB) accounts for about 0.73% of total assets, followed by Jackson Financial Inc Class A (JXN) and Old National Bancorp (ONB).
The top 10 holdings account for about 4.87% 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 added about 1.35% so far this year and is up about 13.43% in the last one year (as of 01/16/2025). In the past 52-week period, it has traded between $145.61 and $181.35.
The ETF has a beta of 1.16 and standard deviation of 22.02% for the trailing three-year period, making it a medium risk choice in the space. With about 1441 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 outstanding 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 Avantis U.S. Small Cap Value ETF (AVUV) and the Vanguard Small-Cap Value ETF (VBR) track a similar index. While Avantis U.S. Small Cap Value ETF has $15.75 billion in assets, Vanguard Small-Cap Value ETF has $31.81 billion. AVUV has an expense ratio of 0.25% and VBR charges 0.07%.
Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are 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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Get it free >>iShares Russell 2000 Value ETF (IWN): ETF Research Reports
Old National Bancorp (ONB) : Free Stock Analysis Report
Vanguard Small-Cap Value ETF (VBR): ETF Research Reports
SouthState Corporation (SSB) : Free Stock Analysis Report
Avantis U.S. Small Cap Value ETF (AVUV): ETF Research Reports
Jackson Financial Inc. (JXN) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
