Should iShares Russell 1000 Value ETF (IWD) Be on Your Investing Radar?

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If you’re interested in broad exposure to the Large Cap Value segment of the US equity market, look no further than the iShares Russell 1000 Value ETF (IWD), a passively managed exchange traded fund launched on 05/22/2000.

– Zacks

The fund is sponsored by Blackrock. It has amassed assets over $60.07 billion, making it one of the largest ETFs attempting to match the Large Cap Value segment of the US equity market.

Why Large Cap Value

Companies that fall in the large cap category tend to have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.

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. Considering long-term performance, value stocks have outperformed growth stocks in almost all markets; however, they are more likely to underperform growth stocks in strong bull markets.

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 0.19%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 1.61%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund’s holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Financials sector–about 21.10% of the portfolio. Healthcare and Industrials round out the top three.

Looking at individual holdings, Berkshire Hathaway Inc Class B (BRK.B) accounts for about 2.54% of total assets, followed by Jpmorgan Chase & Co (JPM) and Johnson & Johnson (JNJ).

The top 10 holdings account for about 17.31% of total assets under management.

Performance and Risk

IWD seeks to match the performance of the Russell 1000 Value Index before fees and expenses. The Russell 1000 Value Index measures the performance of the large-capitalization value sector of the U.S. equity market.

The ETF has added about 0.44% so far this year and was up about 22.25% in the last one year (as of 01/10/2022). In the past 52-week period, it has traded between $135.44 and $170.

The ETF has a beta of 1.01 and standard deviation of 23.16% for the trailing three-year period, making it a medium risk choice in the space. With about 852 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares Russell 1000 Value 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, IWD is an outstanding option for investors seeking exposure to the Style Box – Large Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.

The Vanguard High Dividend Yield ETF (VYM) and the Vanguard Value ETF (VTV) track a similar index. While Vanguard High Dividend Yield ETF has $42.38 billion in assets, Vanguard Value ETF has $93.68 billion. VYM has an expense ratio of 0.06% and VTV charges 0.04%.

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.

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iShares Russell 1000 Value ETF (IWD): ETF Research Reports

JPMorgan Chase & Co. (JPM): Free Stock Analysis Report

Johnson & Johnson (JNJ): Free Stock Analysis Report

Berkshire Hathaway Inc. (BRK.B): Free Stock Analysis Report

Vanguard Value ETF (VTV): ETF Research Reports

Vanguard High Dividend Yield ETF (VYM): ETF Research Reports

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