The iShares Morningstar Small-Cap Growth ETF (ISCG) was launched on 06/28/2004, and is a passively managed exchange traded fund designed to offer broad exposure to the Small Cap Growth segment of the US equity market.
The fund is sponsored by Blackrock. It has amassed assets over $594.86 million, making it one of the average sized ETFs attempting to match the Small Cap Growth segment of the US equity market.
Why Small Cap Growth
Small cap companies have market capitalization below $2 billion. They usually have higher potential than large and mid cap companies with stocks but higher risk.
Qualities of growth stocks include faster growth rates compared to the broader market, as well as higher valuations and higher than average sales and earnings growth rates. Further, growth stocks have a higher level of volatility associated with them. They are likely to outperform value stocks in strong bull markets but over the longer-term, value stocks have delivered better returns than growth stocks in almost all 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 0.06%, making it the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.03%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Industrials sector--about 23% of the portfolio. Healthcare and Information Technology round out the top three.
Looking at individual holdings, Sofi Technologies Inc (SOFI) accounts for about 0.61% of total assets, followed by Insmed Inc (INSM) and Affirm Holdings Inc Class A (AFRM).
The top 10 holdings account for about 5.25% of total assets under management.
Performance and Risk
ISCG seeks to match the performance of the MORNINGSTAR US SML CP BRD GRWTH EXTD ID before fees and expenses. The Morningstar US Small Cap Broad Growth Extended Index comprises of small-capitalization U.S. equities that exhibit growth characteristics.
The ETF has lost about -17.09% so far this year and is down about -8.37% in the last one year (as of 04/07/2025). In the past 52-week period, it has traded between $40.94 and $54.11.
The ETF has a beta of 1.11 and standard deviation of 23.14% for the trailing three-year period. With about 970 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares Morningstar Small-Cap Growth 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, ISCG is a great option for investors seeking exposure to the Style Box - Small Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell 2000 Growth ETF (IWO) and the Vanguard Small-Cap Growth ETF (VBK) track a similar index. While iShares Russell 2000 Growth ETF has $9.79 billion in assets, Vanguard Small-Cap Growth ETF has $15.82 billion. IWO has an expense ratio of 0.24% and VBK 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 Morningstar Small-Cap Growth ETF (ISCG): ETF Research Reports Insmed, Inc. (INSM): Free Stock Analysis Report iShares Russell 2000 Growth ETF (IWO): ETF Research Reports Vanguard Small-Cap Growth ETF (VBK): ETF Research Reports Affirm Holdings, Inc. (AFRM): Free Stock Analysis Report SoFi Technologies, Inc. (SOFI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
