Looking for broad exposure to the Small Cap Growth segment of the US equity market? You should consider the iShares Morningstar Small-Cap Growth ETF (ISCG), a passively managed exchange traded fund launched on 06/28/2004.
The fund is sponsored by Blackrock. It has amassed assets over $426.39 million, making it one of the average sized ETFs attempting to match the Small Cap Growth segment of the US equity market.
Why Small Cap Growth
Sitting at a market capitalization below $2 billion, small cap companies tend to be high-potential stocks compared to its large and mid cap counterparts, but come with higher risk.
Qualities of growth stocks include faster growth rates compared to the broader market, as well as higher valuations and higher than average sales and earnings growth rates. 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.
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 0.06%, making it the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.95%.
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 Industrials sector--about 22.40% of the portfolio. Information Technology and Healthcare round out the top three.
Looking at individual holdings, Vertiv Holdings Class A (VRT) accounts for about 0.78% of total assets, followed by Saia Inc (SAIA) and Pure Storage Inc Class A (PSTG).
The top 10 holdings account for about 5.26% of total assets under management.
Performance and Risk
ISCG seeks to match the performance of the MORNINGSTAR US SML CP BRD GRWTH EXTD ID before fees and expenses. The Morningstar US Small Cap Broad Growth Extended Index comprises of small-capitalization U.S. equities that exhibit growth characteristics.
The ETF has added roughly 8.75% so far this year and it's up approximately 5.58% in the last one year (as of 11/22/2023). In the past 52-week period, it has traded between $35.21 and $43.33.
The ETF has a beta of 1.08 and standard deviation of 24.90% for the trailing three-year period. With about 1087 holdings, it effectively diversifies company-specific risk.