If you're interested in broad exposure to the Small Cap Value segment of the US equity market, look no further than the iShares Morningstar Small-Cap Value ETF (ISCV), a passively managed exchange traded fund launched on June 28, 2004.
The fund is sponsored by Blackrock. It has amassed assets over $626.07 million, making it one of the average sized ETFs attempting to match the Small Cap Value segment of the US equity market.
Why Small Cap Value
Sitting at a market capitalization below $2 billion, small cap companies tend to be high-potential stocks compared to its large and mid cap counterparts, but come with higher risk.
While value stocks have lower than average price-to-earnings and price-to-book ratios, they also have lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.
Costs
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.06%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.9%.
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 Financials sector -- about 23.2% of the portfolio. Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Viatris Inc (VTRS) accounts for about 0.57% of total assets, followed by Alcoa Corp (AA) and Annaly Capital Management Reit Inc (NLY).
The top 10 holdings account for about 4.84% of total assets under management.
Performance and Risk
ISCV seeks to match the performance of the MORNINGSTAR US SML CP BRD VLUE EXTD INDX before fees and expenses. The Morningstar US Small Cap Broad Value Extended Index comprises of small-capitalization U.S. equities that exhibit value characteristics.
The ETF has gained about 7% so far this year and was up about 18.08% in the last one year (as of 02/26/2026). In the past 52-week period, it has traded between $51.37 and $74.38.
The ETF has a beta of 1.05 and standard deviation of 19.96% for the trailing three-year period. With about 1088 holdings, it effectively diversifies company-specific risk.
Alternatives
iShares Morningstar Small-Cap Value 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, ISCV is a great option for investors seeking exposure to the Style Box - Small Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell 2000 Value ETF (IWN) and the Vanguard Small-Cap Value ETF (VBR) track a similar index. While iShares Russell 2000 Value ETF has $13.09 billion in assets, Vanguard Small-Cap Value ETF has $34.43 billion. IWN has an expense ratio of 0.24% and VBR charges 0.05%.
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 Morningstar Small-Cap Value ETF (ISCV): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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