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.

Alternatives

IShares Morningstar Small-Cap 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, ISCV is a great 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 $15.88 billion in assets, Vanguard Small-Cap Value ETF has $31.50 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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iShares Morningstar Small-Cap Value ETF (ISCV): ETF Research Reports

Assurant, Inc. (AIZ) : Free Stock Analysis Report

First Horizon Corporation (FHN) : Free Stock Analysis Report

Vanguard Small-Cap Value ETF (VBR): ETF Research Reports

Tapestry, Inc. (TPR) : Free Stock Analysis Report

Avantis U.S. Small Cap Value ETF (AVUV): ETF Research Reports

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