The iShares Russell Top 200 Growth ETF (IWY) was launched on 09/22/2009, and is a passively managed exchange traded fund designed to offer broad exposure to the Large Cap Growth segment of the US equity market.
The fund is sponsored by Blackrock. It has amassed assets over $4.75 billion, making it one of the larger ETFs attempting to match the Large Cap Growth segment of the US equity market.
Why Large Cap Growth
Companies that find themselves in the large cap category typically 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.
While growth stocks do boast higher than average sales and earnings growth rates, and they are expected to grow faster than the wider market, investors should note these kinds of stocks have higher valuations. Additionally, growth stocks have a greater level of risk associated with them. 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.
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.20%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 0.53%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund’s holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Information Technology sector–about 48.30% of the portfolio. Consumer Discretionary and Telecom round out the top three.
Looking at individual holdings, Microsoft Corp (MSFT) accounts for about 13.17% of total assets, followed by Apple Inc (AAPL) and Amazon Com Inc (AMZN).
The top 10 holdings account for about 57.41% of total assets under management.
Performance and Risk
IWY seeks to match the performance of the Russell Top 200 Growth Index before fees and expenses. The Russell Top 200 Growth Index is a style factor weighted index that measures the performance of the largest capitalization growth sector of the U.S. equity market. It is a subset of the Russell Top 200 Index issuers with relatively higher price-to-book ratios and higher forecasted growth, which measures the performance of the largest capitalization sector of the U.S. equity market.
The ETF has lost about -5.37% so far this year and was up about 24.18% in the last one year (as of 01/11/2022). In the past 52-week period, it has traded between $127.24 and $175.61.
The ETF has a beta of 1.01 and standard deviation of 23.57% for the trailing three-year period, making it a medium risk choice in the space. With about 115 holdings, it effectively diversifies company-specific risk.
IShares Russell Top 200 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, IWY is a great option for investors seeking exposure to the Style Box – Large Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Vanguard Growth ETF (VUG) and the Invesco QQQ (QQQ) track a similar index. While Vanguard Growth ETF has $85.26 billion in assets, Invesco QQQ has $205.92 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
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.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report