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Should iShares S&P Mid-Cap 400 Value ETF (IJJ) Be on Your Investing Radar?

Looking for broad exposure to the Mid Cap Value segment of the US equity market? You should consider the iShares S&P Mid-Cap 400 Value ETF (IJJ), a passively managed exchange traded fund launched on 07/24/2000.

The fund is sponsored by Blackrock. It has amassed assets over $7.22 billion, making it one of the larger 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. These types of companies, then, have a good balance of stability and growth potential.

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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

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 0.18%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.72%.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Industrials sector--about 19.90% of the portfolio. Financials and Consumer Discretionary round out the top three.

Looking at individual holdings, Jabil Inc (JBL) accounts for about 1.35% of total assets, followed by Equity Lifestyle Properties Reit I (ELS) and Reinsurance Group Of America Inc (RGA).

The top 10 holdings account for about 9.1% of total assets under management.

Performance and Risk

IJJ seeks to match the performance of the S&P MidCap 400 Value Index before fees and expenses. The S&P MidCap 400 Value Index measures the performance of the mid-capitalization value sector of the U.S. equity market. It is a subset of the S&P MidCap 400 and consists of those stocks in the S&P MidCap 400 exhibiting the strongest value characteristics.

The ETF has lost about -2.20% so far this year and is up about 3.51% in the last one year (as of 02/22/2024). In the past 52-week period, it has traded between $93.05 and $115.17.

The ETF has a beta of 1.18 and standard deviation of 20.60% for the trailing three-year period, making it a medium risk choice in the space. With about 302 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares S&P Mid-Cap 400 Value 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, IJJ is a great option for investors seeking exposure to the Style Box - Mid Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.

The iShares Russell Mid-Cap Value ETF (IWS) and the Vanguard Mid-Cap Value ETF (VOE) track a similar index. While iShares Russell Mid-Cap Value ETF has $13.11 billion in assets, Vanguard Mid-Cap Value ETF has $16.31 billion. IWS has an expense ratio of 0.23% and VOE charges 0.07%.

Bottom-Line

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also 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.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

iShares S&P Mid-Cap 400 Value ETF (IJJ): ETF Research Reports

Jabil, Inc. (JBL) : Free Stock Analysis Report

Reinsurance Group of America, Incorporated (RGA) : Free Stock Analysis Report

Equity Lifestyle Properties, Inc. (ELS) : Free Stock Analysis Report

Vanguard Mid-Cap Value ETF (VOE): ETF Research Reports

iShares Russell Mid-Cap Value ETF (IWS): ETF Research Reports

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Zacks Investment Research