Should the iShares Morningstar Mid-Cap Value ETF (IMCV) Be on Your Investing Radar?

The iShares Morningstar Mid-Cap Value ETF (IMCV - Free Report) was established on 06/28/2004, and it is a passively managed exchange-traded fund created to provide comprehensive exposure to the Mid Cap Value sector of the U.S. equity market.

Sponsored by Blackrock, this fund has gathered over $682.35 million in assets, positioning it as one of the average-sized ETFs aiming to replicate the Mid Cap Value segment of the U.S. equity marketplace.

Why Mid Cap Value?

Mid-cap companies, with market capitalizations between $2 billion and $10 billion, often present a favorable mix of growth potential and stability. In comparison to large and small-cap firms, mid-cap businesses typically showcase higher growth prospects and lower volatility, respectively.

Value stocks are characterized by lower price-to-earnings and price-to-book ratios. While they might have lower sales and earnings growth rates, historical performance suggests that value stocks often outperform growth stocks in various market conditions. However, during strong bull markets, growth stocks are more likely to lead the pack.

Costs

When assessing an ETF's total return, understanding expense ratios is crucial. Generally, lower-cost funds can outperform their more expensive peers over the long run, given all other conditions are equal.

With annual operating expenses of only 0.06%, this ETF stands out as one of the least expensive options within its space, making it an attractive choice for cost-conscious investors.

Currently, the ETF yields a 12-month trailing dividend of 2.11%.

Sector Exposure and Top Holdings

ETFs provide diversification, reducing the risk associated with single stocks, but it's essential to analyze the fund's individual holdings before making investment decisions. Many ETFs offer transparency, often disclosing their holdings daily.

The iShares Morningstar Mid-Cap Value ETF allocates approximately 19.40% of its portfolio to the Financials sector, which represents its largest sector exposure. The Utilities and Industrials sectors complete the top three sectors represented in the fund.

Among individual holdings, Williams Inc (WMB - Free Report) comprises roughly 1.18% of total assets. Other notable holdings include Capital One Financial Corp (COF - Free Report) and General Motors (GM - Free Report). Together, the top ten holdings make up about 10.58% of total assets under management.

Performance and Risk

IMCV aims to mirror the performance of the MORNINGSTAR US MID CAP BROAD VALUE INDEX before accounting for fees and expenses. This index includes U.S. mid-cap equities that display value characteristics.

This ETF has seen an impressive return of approximately 21.06% year-to-date and is up around 31.33% over the past year (as of 11/29/2024). In the last 52-week period, it has fluctuated between $63.66 and $81.

The ETF features a beta of 1.08 and a standard deviation of 17.34% over the trailing three years, which helps minimize company-specific risk through its 310 holdings.

Alternatives

The iShares Morningstar Mid-Cap Value ETF holds a Zacks ETF Rank of 3 (Hold), which is informed by factors such as anticipated asset class returns, expense ratios, and market momentum. Investors looking for exposure in the Mid Cap Value segment might find IMCV to be a suitable choice.

Moreover, alternative ETF options include the iShares Russell Mid-Cap Value ETF (IWS - Free Report) and the Vanguard Mid-Cap Value ETF (VOE - Free Report). The iShares Russell Mid-Cap Value ETF manages $14.38 billion in assets, while the Vanguard counterpart holds $18.89 billion. IWS has an expense ratio of 0.23%, and VOE charges 0.07%.

Bottom Line

Both retail and institutional investors are increasingly embracing passively managed ETFs due to their affordability, transparency, flexibility, and tax efficiency. Such funds can serve as excellent long-term investment vehicles.

To gain further insights into this ETF and others, investors are encouraged to screen for products that align with their investment goals and stay updated on the latest developments in the ETF landscape.

ETF, Investment, Performance