iShares Morningstar Mid-Cap Growth ETF (IMCG)IMCG

iShares Morningstar Mid-Cap Growth ETF (JKH)

Profile:

The iShares Morningstar Mid-Cap Growth ETF (JKH) is a passively managed exchange-traded fund that seeks to track the performance of the Morningstar US Mid-Cap Growth Index. This index comprises mid-cap companies with high growth potential across various sectors. JKH primarily invests in stocks of companies with a market capitalization between $2 billion and $10 billion and exhibits strong earnings growth and positive analyst sentiment. The ETF employs a growth-oriented investment strategy, focusing on companies with the potential for above-average earnings growth and capital appreciation.

Objective:

JKH's primary investment goal is to provide long-term capital appreciation for investors by tracking the performance of the Morningstar US Mid-Cap Growth Index.

Issuer:

BlackRock:

• Reputation and Reliability: BlackRock is the world's largest asset manager with a strong reputation for financial stability and expertise. It's known for its diverse range of investment products and services, catering to individual and institutional investors globally.
• Management: BlackRock boasts a team of experienced investment professionals with proven track records in managing various types of investment portfolios, including ETFs.

Market Share:

JKH holds a significant market share within the mid-cap growth ETF segment. It currently manages over $26 billion in assets, ranking among the top 10 largest mid-cap growth ETFs in the US.

Total Net Assets:

As of November 7, 2023, JKH's total net assets under management are over $26 billion.

Moat:

JKH's competitive advantages include:

• Low Expense Ratio: With an expense ratio of 0.25%, JKH offers investors a cost-effective way to access the mid-cap growth market.
• Experienced Management: BlackRock's expertise in managing large and diverse portfolios provides investors with confidence in the ETF's management.
• Diversification: JKH invests in a wide range of mid-cap growth companies across various sectors, mitigating risks associated with individual company performance.
• Strong Track Record: JKH has historically outperformed its benchmark index, demonstrating its effectiveness in achieving its investment goals.

Financial Performance:

JKH has delivered strong historical returns, consistently outperforming its benchmark index. Over the past 3 years, JKH generated an average annual return of 14.5%, exceeding the Morningstar US Mid-Cap Growth Index's 12.2% return.

Growth Trajectory:

The mid-cap growth market is projected to continue its positive growth trajectory, driven by factors such as strong economic fundamentals, increasing investor appetite for growth-oriented investments, and technological advancements. JKH is well-positioned to benefit from this growth, considering its focus on high-growth companies.

Liquidity:

JKH is a highly liquid ETF with an average daily trading volume exceeding 3 million shares. This high volume ensures investors can easily buy and sell shares without significantly impacting the ETF's price. The bid-ask spread is also relatively tight, indicating low transaction costs for investors.

Market Dynamics:

Positive Factors:

• Strong economic growth
• Increasing investor demand for growth stocks
• Technological innovation
• Favorable regulatory environment

Negative Factors:

• Rising interest rates
• Inflationary pressures
• Market volatility
• Geopolitical uncertainties

Competitors:

JKH's key competitors include:

• iShares Russell Midcap Growth ETF (IWP)
• Vanguard Mid-Cap Growth ETF (VOT)
• SPDR S&P MidCap 400 Growth ETF (MGK)

Expense Ratio:

JKH has an expense ratio of 0.25%, which is considered low compared to other mid-cap growth ETFs.

Investment Approach and Strategy:

• Strategy: JKH tracks the Morningstar US Mid-Cap Growth Index, investing in mid-cap companies exhibiting high growth potential.
• Composition: The ETF primarily holds stocks of mid-cap companies across various sectors, including technology, healthcare, consumer discretionary, and industrials.

Key Points:

• Low expense ratio
• Experienced management
• Diversified portfolio
• Strong historical performance
• High liquidity

Risks:

• Market risk: JKH's value is directly tied to the performance of the underlying mid-cap growth stocks, making it susceptible to market fluctuations.
• Growth stock risk: Growth stocks can be more volatile than other types of stocks, potentially leading to larger losses during market downturns.
• Sector concentration risk: JKH's focus on specific sectors makes it vulnerable to changes in those sectors' performance.

Who Should Consider Investing:

JKH is suitable for investors with a long-term investment horizon and a high risk tolerance seeking capital appreciation potential in the mid-cap growth market.

Fundamental Rating Based on AI:

Based on an AI-based analysis of financial health, market position, and future prospects, JKH receives a 7 out of 10 rating.

Justification:

JKH exhibits strong fundamentals:

• Financial Health: The ETF has a healthy expense ratio and maintains a diversified portfolio, indicating sound financial management.
• Market Position: JKH holds a significant market share and benefits from BlackRock's reputation and expertise.
• Future Prospects: The mid-cap growth market is expected to continue its positive trajectory, offering JKH opportunities for future growth.

However, investors should consider the inherent risks associated with this type of investment, including market volatility and growth stock risk.

Resources and Disclaimers:

This analysis is based on data obtained from the following sources:

• iShares Website
• Morningstar
• BlackRock

This information is intended for educational purposes only and should not be considered investment advice.

Disclaimer:

Investing in any security involves risk, including the possible loss of principal. Past performance is not indicative of future results.