Looking for broad exposure to the Small Cap Growth segment of the US equity market? You should consider the iShares Russell 2000 Growth ETF (IWO), a passively managed exchange traded fund launched on July 24, 2000.
The fund is sponsored by Blackrock. It has amassed assets over $12.75 billion, making it one of the largest ETFs attempting to match the Small Cap Growth segment of the US equity market.
Why Small Cap Growth
With more potential comes more risk, and small cap companies, with market capitalization below $2 billion, epitomizes this way of thinking.
While growth stocks do boast higher than average sales and earnings growth rates, and they are expected to grow faster than the wider market, investors should note these kinds of stocks have higher valuations. Something to keep in mind is the higher level of volatility that is affiliated with growth stocks. When you consider growth versus value, growth stocks are usually the clear winner in strong bull markets but tend to fall flat in nearly all other environments.
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 0.24%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.67%.
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 Information Technology sector -- about 23.7% of the portfolio. Healthcare and Industrials round out the top three.
Looking at individual holdings, Credo Technology Group Holding Ltd (CRDO) accounts for about 1.52% of total assets, followed by Fabrinet (FN) and Bloom Energy Class A Corp (BE).
The top 10 holdings account for about 7.87% of total assets under management.
Performance and Risk
IWO seeks to match the performance of the Russell 2000 Growth Index before fees and expenses. The Russell 2000 Growth Index measures the performance of the small-capitalization growth sector of the U.S. equity market. It is a subset of the Russell 2000 Index, which measures the performance of the small-capitalization sector of the U.S. equity market & approximately 51% of the total market value of the Russell 2000 Index.
The ETF return is roughly 10.62% so far this year and was up about 14.06% in the last one year (as of 10/13/2025). In the past 52-week period, it has traded between $224.16 and $327.97.
The ETF has a beta of 1.17 and standard deviation of 22.32% for the trailing three-year period, making it a high risk choice in the space. With about 1093 holdings, it effectively diversifies company-specific risk.
Alternatives
iShares Russell 2000 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, IWO is an excellent 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 S&P Small-Cap 600 Growth ETF (IJT) and the Vanguard Small-Cap Growth ETF (VBK) track a similar index. While iShares S&P Small-Cap 600 Growth ETF has $6.05 billion in assets, Vanguard Small-Cap Growth ETF has $20.14 billion. IJT has an expense ratio of 0.18% and VBK 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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iShares Russell 2000 Growth ETF (IWO): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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