Looking for broad exposure to the Small Cap Blend segment of the US equity market? You should consider the iShares Russell 2000 ETF (IWM – Free Report) , a passively managed exchange traded fund launched on 05/22/2000.
The fund is sponsored by Blackrock. It has amassed assets over $73.34 billion, making it one of the largest ETFs attempting to match the Small Cap Blend segment of the US equity market.
Why Small Cap Blend
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.
Blend ETFs are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.
Costs
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.19%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.13%.
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 18.20% of the portfolio. Industrials and Healthcare round out the top three.
Looking at individual holdings, Ftai Aviation Ltd (FTAI – Free Report) accounts for about 0.59% of total assets, followed by Sprouts Farmers Market Inc (SFM – Free Report) and Insmed Inc (INSM – Free Report) .
The top 10 holdings account for about 3.88% of total assets under management.
Performance and Risk
IWM seeks to match the performance of the Russell 2000 Index before fees and expenses. The Russell 2000 Index measures the performance of the small capitalization sector of the U.S. equity market.
The ETF return is roughly 1.57% so far this year and it’s up approximately 16.87% in the last one year (as of 01/06/2025). In the past 52-week period, it has traded between $189.48 and $242.40.
The ETF has a beta of 1.16 and standard deviation of 23.05% for the trailing three-year period, making it a medium risk choice in the space. With about 1974 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares Russell 2000 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, IWM is an outstanding option for investors seeking exposure to the Style Box – Small Cap Blend segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Vanguard Small-Cap ETF (VB – Free Report) and the iShares Core S&P Small-Cap ETF (IJR – Free Report) track a similar index. While Vanguard Small-Cap ETF has $63.14 billion in assets, iShares Core S&P Small-Cap ETF has $88.33 billion. VB has an expense ratio of 0.05% and IJR charges 0.06%.
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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