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

Designed to provide broad exposure to the Large Cap Value segment of the US equity market, the iShares Russell 1000 Value ETF (IWD) is a passively managed exchange traded fund launched on 05/22/2000.

The fund is sponsored by Blackrock. It has amassed assets over $48.60 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 find themselves in the large cap category typically have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.

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Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.

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 0.18%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 2.21%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. 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 20.30% 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 3.02% of total assets, followed by Exxon Mobil Corp (XOM) and Johnson & Johnson (JNJ).

The top 10 holdings account for about 18.31% 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 lost about -0.72% so far this year and is down about -3.29% in the last one year (as of 06/02/2023). In the past 52-week period, it has traded between $135.99 and $161.56.

The ETF has a beta of 0.95 and standard deviation of 17.41% for the trailing three-year period, making it a medium risk choice in the space. With about 855 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 $47.46 billion in assets, Vanguard Value ETF has $98.78 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.

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

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

Johnson & Johnson (JNJ) : Free Stock Analysis Report

Exxon Mobil Corporation (XOM) : 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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Zacks Investment Research