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The iShares S&P Small-Cap 600 Value ETF (IJS) was launched on 07/24/2000, and is a passively managed exchange traded fund designed to offer broad exposure to the Small Cap Value segment of the US equity market.

The fund is sponsored by Blackrock. It has amassed assets over $6.70 billion, making it one of the larger ETFs attempting to match the Small Cap Value segment of the US equity market.

Why Small Cap Value

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.

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. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.

Costs

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.18%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 1.57%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. 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 18.70% of the portfolio. Industrials and Consumer Discretionary round out the top three.

Looking at individual holdings, Blk Csh Fnd Treasury Sl Agency (XTSLA) accounts for about 1.74% of total assets, followed by Academy Sports And Outdoors Inc (ASO) and Advance Auto Parts Inc (AAP).

The top 10 holdings account for about 8.94% of total assets under management.

Performance and Risk

IJS seeks to match the performance of the S&P SmallCap 600 Value Index before fees and expenses. The S&P SmallCap 600 Value Index measures the performance of the small capitalization value sector of the U.S. equity market.

The ETF has lost about -6.88% so far this year and is up about 4.61% in the last one year (as of 04/22/2024). In the past 52-week period, it has traded between $82.10 and $104.53.

The ETF has a beta of 1.18 and standard deviation of 22.27% for the trailing three-year period, making it a medium risk choice in the space. With about 514 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares S&P Small-Cap 600 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, IJS is an excellent option for investors seeking exposure to the Style Box - Small Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.

The iShares Russell 2000 Value ETF (IWN) and the Vanguard Small-Cap Value ETF (VBR) track a similar index. While iShares Russell 2000 Value ETF has $11.66 billion in assets, Vanguard Small-Cap Value ETF has $27.08 billion. IWN has an expense ratio of 0.24% and VBR charges 0.07%.

Bottom-Line

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds 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.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.