Designed to provide broad exposure to the Small Cap Growth segment of the US equity market, the iShares Russell 2000 Growth ETF (IWO) is a passively managed exchange traded fund launched on July 24, 2000.
The fund is sponsored by Blackrock. It has amassed assets over $13.42 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
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. Also, growth stocks are a type of equity that carries more risk compared to others. Compared to value stocks, growth stocks are a safer bet in a strong bull market, but don't perform as strongly in almost all other financial 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 0.64%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. 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 25.4% of the portfolio. Information Technology and Industrials round out the top three.
Looking at individual holdings, Bloom Energy Class A Corp (BE) accounts for about 2% of total assets, followed by Credo Technology Group Holding Ltd (CRDO) and Fabrinet (FN).
The top 10 holdings account for about 10.64% 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 added roughly 14.69% so far this year and is up about 9.25% in the last one year (as of 12/16/2025). In the past 52-week period, it has traded between $224.16 and $339.33.
The ETF has a beta of 1.14 and standard deviation of 21.87% for the trailing three-year period, making it a high risk choice in the space. With about 1096 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 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 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 $6.48 billion in assets, Vanguard Small-Cap Growth ETF has $20.80 billion. IJT has an expense ratio of 0.18% and VBK charges 0.07%.
Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are 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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