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

The iShares Morningstar Mid-Cap Value ETF (IMCV - Free Report) was launched on June 28, 2004. This ETF is designed to provide extensive exposure to the mid-cap value segment within the U.S. equity market.

Sponsored by Blackrock, IMCV has accumulated assets exceeding $682.35 million, which positions it among the mid-sized ETFs targeting the mid-cap value sector.

Why Focus on Mid Cap Value?

Mid-cap companies, with a market capitalization ranging from $2 billion to $10 billion, often present a perfect balance between growth potential and stability. These companies typically exhibit higher growth prospects than larger firms while being less volatile than smaller ones.

Investors interested in value stocks should note that these stocks usually have lower price-to-earnings and price-to-book ratios. However, they also tend to show lower sales and earnings growth rates. Historically, value stocks have outperformed growth stocks over extended periods, particularly when considering long-term performance. Conversely, growth stocks may outperform during robust bull markets.

Cost Considerations

When assessing an ETF's total return, one crucial factor is the expense ratio. Lower-cost funds tend to outperform their higher-cost counterparts over the long run, assuming all other factors are equal.

The iShares Morningstar Mid-Cap Value ETF features a notably low annual operating expense ratio of just 0.06%, making it one of the least expensive options in its category.

Additionally, IMCV offers a 12-month trailing dividend yield of approximately 2.11%.

Sector Allocation and Key Holdings

ETFs are designed to provide diversified exposure, minimizing the risk associated with individual stocks. Therefore, examining a fund's holdings before investing is essential. Most ETFs maintain transparency, often revealing their holdings on a daily basis.

In terms of sector allocation, the iShares Morningstar Mid-Cap Value ETF invests heavily in the Financials sector, constituting around 19.40% of its portfolio. The top three sectors also include Utilities and Industrials.

When looking at individual holdings, Williams Inc (WMB - Free Report) represents about 1.18% of the total assets, followed by Capital One Financial Corp (COF - Free Report) and General Motors (GM - Free Report). Collectively, the top 10 holdings account for approximately 10.58% of the total assets under management.

Performance and Risk Assessment

IMCV aims to replicate the performance of the Morningstar US Mid Cap Broad Value Index, before considering fees and expenses. This index comprises mid-cap U.S. equities that showcase value characteristics.

As of November 29, 2024, IMCV has demonstrated a year-to-date return of around 21.06%, and it has increased by approximately 31.33% over the past year. Throughout the last 52 weeks, the ETF has traded within a range of $63.66 to $81.

With a beta of 1.08 and a standard deviation of 17.34% for the trailing three-year period, the ETF effectively diversifies company-specific risks, encompassing about 310 individual holdings.

Alternative Investment Options

The iShares Morningstar Mid-Cap Value ETF is classified with a Zacks ETF Rank of 3 (Hold), a designation reflecting expectations related to asset class returns, expense ratios, and momentum, among other factors. Therefore, IMCV is a sensible choice for investors targeting exposure within the mid-cap value investment space.

Investors looking for alternatives can consider other ETFs like 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 boasts $14.38 billion in assets, while the Vanguard Mid-Cap Value ETF holds around $18.89 billion. The expense ratios for these funds are 0.23% for IWS and 0.07% for VOE.

Final Thoughts

More investors, both retail and institutional, are gravitating toward passively managed ETFs due to their low costs, transparency, adaptability, and tax efficiency. These attributes make them excellent investment vehicles for long-term strategies.

For further information regarding this and other ETFs, it is advisable to screen for products aligning with your investment goals and stay updated on the latest developments in the ETF investing landscape.

ETF, Investment, Value