The iShares Russell 2000 Growth ETF (IWO) was launched on 07/24/2000, 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 $9.80 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
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.
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. 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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
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 0.99%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Healthcare sector--about 23.90% of the portfolio. Industrials and Information Technology round out the top three.
Looking at individual holdings, Sprouts Farmers Market Inc (SFM) accounts for about 1.16% of total assets, followed by Insmed Inc (INSM) and Ftai Aviation Ltd (FTAI).
The top 10 holdings account for about 7.84% 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 has lost about -18.03% so far this year and is down about -8.11% in the last one year (as of 04/11/2025). In the past 52-week period, it has traded between $224.16 and $315.36.
The ETF has a beta of 1.16 and standard deviation of 24.85% for the trailing three-year period, making it a high risk choice in the space. With about 1115 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares Russell 2000 Growth ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, IWO is a good option for those seeking exposure to the Style Box - Small Cap Growth area of the market. Investors might also want to consider some other ETF options in the space.
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 $5.25 billion in assets, Vanguard Small-Cap Growth ETF has $15.91 billion. IJT has an expense ratio of 0.18% 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.
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iShares Russell 2000 Growth ETF (IWO): ETF Research Reports Insmed, Inc. (INSM): Free Stock Analysis Report Sprouts Farmers Market, Inc. (SFM): Free Stock Analysis Report iShares S&P Small-Cap 600 Growth ETF (IJT): ETF Research Reports FTAI Aviation Ltd. (FTAI): Free Stock Analysis Report Vanguard Small-Cap Growth ETF (VBK): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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