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Looking for broad exposure to the Small Cap Value segment of the US equity market? You should consider the iShares Morningstar Small-Cap Value ETF (ISCV), a passively managed exchange traded fund launched on 06/28/2004.
The fund is sponsored by Blackrock. It has amassed assets over $456.21 million, making it one of the average sized ETFs attempting to match the Small Cap Value segment of the US equity market.
Why Small Cap Value
There's a lot of potential to investing in small cap companies, but with market capitalization below $2 billion, that high potential comes with even higher risk.
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. 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 0.06%, making it the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.99%.
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 26.60% of the portfolio. Consumer Discretionary and Industrials round out the top three.
Looking at individual holdings, Tapestry Inc (TPR) accounts for about 0.61% of total assets, followed by Assurant Inc (AIZ) and First Horizon Corp (FHN).
The top 10 holdings account for about 4.46% of total assets under management.
Performance and Risk
ISCV seeks to match the performance of the MORNINGSTAR US SML CP BRD VLUE EXTD INDX before fees and expenses. The Morningstar US Small Cap Broad Value Extended Index comprises of small-capitalization U.S. equities that exhibit value characteristics.
The ETF has added about 1.26% so far this year and it's up approximately 11.99% in the last one year (as of 02/13/2025). In the past 52-week period, it has traded between $56.09 and $69.50.
The ETF has a beta of 1.25 and standard deviation of 20.99% for the trailing three-year period. With about 1134 holdings, it effectively diversifies company-specific risk.