Should iShares Morningstar Mid-Cap Value ETF (IMCV) Be on Your Investing Radar?
The iShares Morningstar Mid-Cap Value ETF (IMCV - Free Report) was introduced on June 28, 2004. It is a passively managed exchange-traded fund (ETF) created to provide comprehensive exposure to the Mid Cap Value segment of the U.S. equity market.
This fund is backed by Blackrock and has accumulated assets exceeding $682.35 million, positioning it as a mid-sized ETF targeting the Mid Cap Value category of the U.S. equity market.
Why Choose Mid Cap Value?
Mid-cap companies, with market capitalizations between $2 billion and $10 billion, typically present a blend of higher growth potential compared to large caps and reduced volatility relative to small caps. This balance makes them appealing for many investors.
Value stocks usually possess lower-than-average price-to-earnings and price-to-book ratios, which indicates they may be undervalued compared to their fundamentals. However, they tend to show lower sales and earnings growth rates. Historically, value stocks have outperformed growth stocks in various market conditions, although growth stocks might outperform during strong bull markets.
Cost Considerations
When evaluating an ETF's potential returns, it's crucial to look at its expense ratio. Lower-cost funds can deliver significantly better outcomes over time compared to higher-cost alternatives, assuming all other factors are equal.
The annual operating expenses for IMCV are a mere 0.06%, classifying it among the least expensive options in the market.
The ETF also boasts a 12-month trailing dividend yield of 2.11%.
Sector Allocations and Major Holdings
ETFs are known for their diversified nature, which helps reduce the risk associated with individual stocks. Nevertheless, it's essential to analyze the holdings of the fund before making an investment. Many ETFs provide transparency by disclosing their holdings daily.
In terms of sector allocation, this ETF has a significant focus on the Financials sector, which constitutes roughly 19.40% of its portfolio. The Utilities and Industrials sectors complete the top three allocations.
As for individual holdings, Williams Inc (WMB - Free Report) makes up approximately 1.18% of total assets, followed by companies like Capital One Financial Corp (COF - Free Report) and General Motors (GM - Free Report). Collectively, the top ten holdings account for about 10.58% of total assets managed.
Performance and Risk Assessment
IMCV aims to replicate the performance of the MORNINGSTAR US MID CAP BROAD VALUE INDEX, excluding fees and expenses. This index includes U.S. mid-capitalization stocks that exhibit value characteristics.
As of November 29, 2024, the ETF has achieved a return of roughly 21.06% for the current year and an impressive increase of about 31.33% over the last year. In the past 52 weeks, its trading range has fluctuated between $63.66 and $81.
The ETF has a beta of 1.08, with a standard deviation of 17.34% over a trailing three-year period. With around 310 individual holdings, IMCV effectively mitigates risks associated with any single company.
Alternative Options
The iShares Morningstar Mid-Cap Value ETF carries a Zacks ETF Rank of 3 (Hold). This rank reflects considerations such as expected asset class returns, expense ratios, and momentum. Therefore, IMCV serves as a viable choice for investors looking to gain exposure within the Mid Cap Value space. However, there are other ETF alternatives worth considering.
The iShares Russell Mid-Cap Value ETF (IWS - Free Report) and the Vanguard Mid-Cap Value ETF (VOE - Free Report) both track similar indices. The iShares Russell Mid-Cap Value ETF has total assets of $14.38 billion, while the Vanguard Mid-Cap Value ETF boasts $18.89 billion in assets. IWS has an expense ratio of 0.23%, whereas VOE charges 0.07%.
Conclusion
Investors, both retail and institutional, are increasingly turning to passively managed ETFs due to their low costs, transparency, flexibility, and tax efficiency. These funds are excellent vehicles for long-term investing.
To discover more about IMCV and other ETFs, consider filtering products that align with your investment goals and stay informed through ongoing education about the ETF landscape.
ETF, Investment, Finance