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

If you're interested in broad exposure to the Mid Cap Value segment of the US equity market, look no further than the iShares Morningstar Mid-Cap Value ETF (JKI), a passively managed exchange traded fund launched on 06/28/2004.

The fund is sponsored by Blackrock. It has amassed assets over $423.68 M, making it one of the average sized ETFs attempting to match the Mid Cap Value segment of the US equity market.

Why Mid Cap Value

Compared to large and small cap companies, mid cap businesses tend to have higher growth prospects and are less volatile, respectively, with market capitalization between $2 billion and $10 billion. Thus, companies that fall under this category provide a stable and growth-heavy investment.

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. Considering long-term performance, value stocks have outperformed growth stocks in almost all markets; however, they are more likely to underperform growth stocks in strong bull markets.

Costs

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.30%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 2.46%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Financials sector--about 18.30% of the portfolio. Consumer Discretionary and Utilities round out the top three.

Looking at individual holdings, Freeport Mcmoran Inc (FCX) accounts for about 1.26% of total assets, followed by Fifth Third Bancorp (FITB) and Andeavor (ANDV).

The top 10 holdings account for about 11.37% of total assets under management.

Performance and Risk

JKI seeks to match the performance of the Morningstar Mid Value Index before fees and expenses. The Morningstar Mid Value Index measures the performance of stocks issued by mid-capitalization companies.

The ETF has added roughly 0.76% so far this year and was up about 9.43% in the last one year (as of 06/27/2018). In the past 52-week period, it has traded between $144.45 and $168.36.

The ETF has a beta of 0.95 and standard deviation of 14.03% for the trailing three-year period, making it a medium risk choice in the space. With about 192 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares Morningstar Mid-Cap Value ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, JKI is a good option for those seeking exposure to the Mid Cap ETFs area of the market. Investors might also want to consider some other ETF options in the space.

The Vanguard Mid-Cap Value ETF (VOE) and the iShares Russell Mid-Cap Value ETF (IWS) track a similar index. While Vanguard Mid-Cap Value ETF has $8.46 B in assets, iShares Russell Mid-Cap Value ETF has $10.64 B. VOE has an expense ratio of 0.07% and IWS charges 0.25%.

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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ISHARS-MO MC VL (JKI): ETF Research Reports
 
Fifth Third Bancorp (FITB) : Free Stock Analysis Report
 
ISHARS-RS M VL (IWS): ETF Research Reports
 
VANGD-MC VALUE (VOE): ETF Research Reports
 
Freeport-McMoRan Inc. (FCX) : Free Stock Analysis Report
 
Tesoro Corporation (ANDV) : Free Stock Analysis Report
 
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