If you’re interested in broad exposure to the Mid Cap Growth segment of the US equity market, look no further than the iShares Morningstar MidCap Growth ETF (IMCG), a passively managed exchange traded fund launched on 06/28/2004.
The fund is sponsored by Blackrock. It has amassed assets over $1.49 billion, making it one of the average sized ETFs attempting to match the Mid Cap Growth segment of the US equity market.
Why Mid Cap Growth
With market capitalization between $2 billion and $10 billion, mid cap companies usually contain higher growth prospects than large cap companies, and are considered less risky than their small cap counterparts. Thus, companies that fall under this category provide a stable and growth-heavy investment.
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
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 0.43%.
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 Information Technology sector–about 30.80% of the portfolio. Industrials and Healthcare round out the top three.
Looking at individual holdings, Dexcom Inc (DXCM) accounts for about 1.25% of total assets, followed by Airbnb Inc Class A (ABNB) and Marvell Technology Inc (MRVL).
The top 10 holdings account for about 10.11% of total assets under management.
Performance and Risk
IMCG seeks to match the performance of the MORNINGSTAR US MID CAP BROAD GROWTH INDX before fees and expenses. The Morningstar US Mid Cap Broad Growth Index comprises of mid-capitalization U.S. equities that exhibit growth characteristics.
The ETF has added roughly 11.60% so far this year and it’s up approximately 11.41% in the last one year (as of 12/20/2021). In the past 52-week period, it has traded between $59.71 and $76.33.
The ETF has a beta of 1.05 and standard deviation of 24.70% for the trailing three-year period. With about 375 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares Morningstar MidCap Growth ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, IMCG is an outstanding option for investors seeking exposure to the Style Box – Mid Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Vanguard MidCap Growth ETF (VOT) and the iShares Russell MidCap Growth ETF (IWP) track a similar index. While Vanguard MidCap Growth ETF has $12.17 billion in assets, iShares Russell MidCap Growth ETF has $15.61 billion. VOT has an expense ratio of 0.07% and IWP charges 0.23%.
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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