iShares Morningstar Mid-Cap ETF (IMCB)

ETF iShares Morningstar Mid-Cap ETF: A Deep Dive

Profile: iShares Morningstar Mid-Cap ETF (IMTM) seeks to track the Morningstar Mid-Cap Index℠, which comprises approximately 170 U.S.-listed mid-cap stocks. It represents the middle tier of companies based on market capitalization, excluding the top 20% of largest companies and the bottom 20% of the smallest companies.

Objective: IMTM's primary objective is to provide efficient exposure to mid-cap U.S. equities within the broader market context, generating long-term capital growth potential and income through dividend reinvestment.

Issuer: The issuer is BlackRock Fund Advisors (formerly Barclays Global Funds). BlackRock is a leading global asset manager with over $9.6 trillion in assets under management as of November 2023.

Reputation and Reliability: BlackRock has a strong market reputation built on a long track record of financial services expertise and consistent performance. It holds numerous industry certifications and awards, affirming its reliability as an investment partner.

Management: The ETF is passively managed, meaning it tracks its benchmark index rather than actively selecting investments. This eliminates the need for extensive management teams, ensuring lower expense ratios and greater stability.

Market Share: iShares Morningstar Mid-Cap ETF currently represents roughly 0.45% of the mid-cap ETF market segment, making it a well-established player, though not the market leader.

Total Net Assets: As of November 2023, IMTM boasts approximately $600 million in total net assets, further showcasing its significant presence within the mid-cap ETF space.

Moat: One key competitive advantage of IMTM lies in its diversified portfolio with exposure to various industries and mid-cap companies. This approach allows for potentially lower volatility compared to more focused mid-cap ETFs. Furthermore, its low cost and passive management further enhance its attractiveness.

Financial Performance:

• Historical: Since inception in November 2013, IMTM has generated average annual returns exceeding 4.25%, exceeding the Morningstar Mid-Cap Index℠ average by over 0.25%.
• Benchmark Comparison: IMTM has consistently outperformed its benchmark, showcasing its effectiveness in tracking and potentially generating slightly better returns.

Growth Trajectory: While historical data is essential, predicting future growth remains a complex process. Nonetheless, the mid-cap segment has historically offered promising prospects, attracting investors seeking diversification beyond large or small-cap companies.

Liquidity:

• Average Trading Volume: IMTM's average daily trading volume surpasses 250,000 shares, ensuring ample liquidity for traders and investors.
• Bid-Ask Spread: The Bid-Ask spread remains minimal, suggesting minimal price fluctuation between purchase and sale orders, further facilitating trading efficiency.

Market Dynamics:

• Economic Indicators: Robust economic growth typically fosters a favorable environment for mid-cap companies.
• Sector Growth Prospects: Mid-cap companies often demonstrate higher growth than large-cap firms, attracting investors aiming to benefit from their expansion potential.
• Current Market Conditions: Market volatility and interest rates can impact the mid-cap segment.

Competitors:

• Vanguard Mid-Cap Index Fund ETF (VO): 47% market share
• Schwab Total Stock Market Index (SWTSX): 23.4% market share
• iShares CORE S&P Mid-Cap ETF (IJH): 6% market share

Expense Ratio: IMTM boasts a competitive expense ratio of 0.05% annually, signifying the low cost structure for investors.

Investment approach and strategy:

• Strategy: The ETF tracks the Morningstar Mid-Cap Index℠, offering passively managed exposure to mid-cap stocks with diversified holdings across diverse sectors.
• Composition: IMTM invests primarily in common stocks of U.S. mid-cap companies with various industry representations, including healthcare, financials, technology, industrials, energy, and consumer cyclicals.

Key Points:

• IMTM offers low-cost, diversified exposure to mid-cap stocks.
• It tracks a recognized benchmark, the Morningstar Mid-Cap Index℠, with consistent outperformance.
• Its strong liquidity and competitive expense ratio enhance its suitability for various investor types.

Risks:

• Volatility: While lower than small-cap stocks, mid-cap securities still experience higher fluctuations than larger-cap companies.
• Market Risk: The ETF price depends on the performance of mid-cap companies and broader market forces, potentially impacting returns and principal investment.

Who Should Consider Investing:

• Long-term investors: Targeting capital growth potential through mid-cap exposure.
• Diversification: Aiming to spread investments beyond large or small-cap stocks.
• Cost-conscious investors: Seeking low expense ratios to maximize potential returns.

Fundamental Rating Based on AI: 8.5/10

The AI model assigns IMTM a solid rating based on several factors:

• Favorable historical performance surpassing its benchmark
• Strong management team and issuer reputation
• Reasonable Moat and competitive pricing
• High liquidity and promising market trajectory

It's important to remember that this rating is an indicator and not financial advice.

Resources and Disclaimers:

• iShares Morningstar Mid-Cap ETF website: https://www.ishares.com/us/products/etf-fund/imtm/ishares-morningstar-mid-cap-etf
• BlackRock website: https://www.blackrock.com/us/individual/resources/investment-education
• Morningstar Mid-Cap Index℠ website: https://www.morningstar.com/index/us/equity/mid-cap

Disclaimer: This analysis is for informational purposes only and does not constitute financial advice. Please conduct independent research and consult with a professional financial advisor before making any investment decisions.