Should iShares Morningstar MidCap Value ETF (JKI) Be on Your Investing Radar?

The iShares Morningstar MidCap Value ETF (JKI) was launched on 06/28/2004, and is a passively managed exchange traded fund designed to offer broad exposure to the Mid Cap Value segment of the US equity market.

The fund is sponsored by Blackrock (NYSE:BLK). It has amassed assets over $348.74 million, making it one of the average sized ETFs attempting to match the Mid Cap Value segment of the US equity market.

Why Mid Cap Value

Compared to large and small cap companies, mid cap businesses tend to have higher growth prospects and are less volatile, respectively, with market capitalization between $2 billion and $10 billion. Thus they have a nice balance of growth potential and stability.

Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their 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

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 0.30%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 3.50%.

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 Financials sector--about 19.70% of the portfolio. Utilities and Materials round out the top three.

Looking at individual holdings, Zimmer Biomet Holdings Inc (NYSE:ZBH) accounts for about 1.66% of total assets, followed by Eversource Energy (NYSE:ES) and Hp Inc (HPQ).

The top 10 holdings account for about 15.03% of total assets under management.

Performance and Risk

JKI seeks to match the performance of the Morningstar Mid Value Index before fees and expenses. The Morningstar Mid Value Index measures the performance of stocks issued by mid-capitalization companies.

The ETF has lost about -30.90% so far this year and is down about -24.95% in the last one year (as of 06/05/2020). In the past 52-week period, it has traded between $91.54 and $170.57.

The ETF has a beta of 1.16 and standard deviation of 24.11% for the trailing three-year period, making it a medium risk choice in the space. With about 184 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares Morningstar MidCap Value 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, JKI is a sufficient option for those seeking exposure to the Style Box (NYSE:BOX) - Mid Cap Value area of the market. Investors might also want to consider some other ETF options in the space.

The Vanguard MidCap Value ETF (VOE) and the iShares Russell MidCap Value ETF (IWS) track a similar index. While Vanguard MidCap Value ETF has $8.96 billion in assets, iShares Russell MidCap Value ETF has $10.12 billion. VOE has an expense ratio of 0.07% and IWS charges 0.24%.

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.