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 June 28, 2004. This ETF is designed to passively track the Mid Cap Value segment of the US equity market.

Sponsored by BlackRock, this fund has grown its assets to more than $682.35 million, making it a mid-sized option for investors looking to target the Mid Cap Value segment.

Why Consider Mid Cap Value?

Mid cap companies, with market capitalizations ranging from $2 billion to $10 billion, often present a favorable balance between growth potential and stability when compared to their large and small cap counterparts. These companies tend to demonstrate more growth prospects than large caps while exhibiting less volatility than small caps.

Value stocks, which typically show lower than average price-to-earnings (P/E) and price-to-book (P/B) ratios, have historically outperformed growth stocks in various market conditions. However, it is essential to highlight that in strong bull markets, growth stocks may outshine value stocks.

Cost Considerations

When evaluating an ETF's overall returns, the expense ratio is a critical aspect to consider. A lower expense ratio means that the fund can significantly outperform more expensive counterparts over the long term, all else being equal.

The iShares Morningstar Mid-Cap Value ETF boasts an impressively low annual expense ratio of 0.06%, positioning it as one of the more cost-effective funds in its category. Additionally, the ETF offers a trailing dividend yield of 2.11% over the past year.

Sector Allocation and Key Holdings

ETFs provide diversified exposure, which helps mitigate risks associated with individual stocks. However, it's still crucial to examine a fund's holdings prior to making an investment. Most ETFs are highly transparent, routinely disclosing their holdings.

IMCV primarily invests in the Financials sector, which constitutes approximately 19.40% of its portfolio. The Utilities and Industrials sectors also feature prominently in its allocations.

In terms of specific holdings, Williams Inc (WMB - Free Report) represents about 1.18% of the total assets. It is followed closely by Capital One Financial Corp(https://www.capitalone.com) (COF - Free Report) and General Motors(https://www.gm.com) (GM - Free Report). The top 10 holdings account for roughly 10.58% of the fund's total assets under management.

Performance and Risk Profile

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

As of November 29, 2024, IMCV has delivered a return of about 21.06% year-to-date and has increased by approximately 31.33% over the past year. Over the past 52 weeks, the ETF has fluctuated between $63.66 and $81.

With a beta of 1.08 and a standard deviation of 17.34% over the trailing three-year period, IMCV effectively diversifies risks tied to specific companies with its 310 holdings.

Alternative Investment Options

The iShares Morningstar Mid-Cap Value ETF holds a Zacks ETF Rank of 3 (Hold). This rating considers factors such as expected returns for the asset class, expense ratios, and market momentum. Thus, IMCV is a solid choice for investors seeking exposure to the Mid Cap Value category. Investors may also want to look at other ETFs with similar focuses.

For instance, the iShares Russell Mid-Cap Value ETF(https://www.ishares.com/us/products/239726/) (IWS - Free Report) and the Vanguard Mid-Cap Value ETF(https://investor.vanguard.com/etf/profile/VOE) (VOE - Free Report) both track similar indices. The IWS ETF has $14.38 billion in assets, while VOE holds $18.89 billion. IWS charges an expense ratio of 0.23%, while VOE has a rate of 0.07%.

Final Thoughts

Many retail and institutional investors are increasingly favoring passively managed ETFs due to their low costs, transparency, flexibility, and tax efficiency. These funds are excellent options for long-term investment strategies.

If you wish to learn more about this ETF and others like it, consider screening for various products that align with your investment goals. Staying informed through articles and updates on the ETF market can also be beneficial.

ETF, Investment, Finance