iShares Morningstar Small-Cap Growth ETF (ISCG)

ETF iShares Morningstar Small-Cap Growth ETF (ISCG) Overview

Profile:

ISCG is an actively managed exchange-traded fund (ETF) that seeks long-term capital appreciation by investing primarily in small-cap U.S. equities with strong growth potential. It invests in a diversified portfolio of companies across various industries, focusing on those with favorable growth characteristics and strong financials.

Objective:

The primary investment goal of ISCG is to outperform the Morningstar US Small-Cap Growth Index and achieve long-term capital appreciation through investments in high-growth small-cap stocks.

Issuer:

iShares is a leading provider of ETFs globally, with a strong reputation and track record in the market. The company is part of BlackRock, the world's largest asset manager.

Reputation and Reliability:

iShares has a strong reputation for providing high-quality, innovative ETF products. BlackRock is known for its expertise in managing assets and its commitment to responsible investing.

Management:

The portfolio management team of ISCG consists of experienced investment professionals with a deep understanding of the small-cap growth market. The team uses a proprietary research process and quantitative analysis to identify potential investment opportunities.

Market Share:

ISCG has a market share of approximately 3% within the U.S. small-cap growth ETF category.

Total Net Assets:

As of November 10, 2023, ISCG has total net assets of approximately $7.5 billion.

Moat:

ISCG has a few competitive advantages:

• Active Management: Unlike many small-cap ETFs, ISCG is actively managed, allowing the portfolio managers to select individual stocks based on their growth potential.
• Diversification: ISCG invests in a broad range of companies across various industries, mitigating idiosyncratic risk.
• Experienced Management Team: The portfolio managers have a strong track record and deep understanding of the small-cap market.

Financial Performance:

ISCG has delivered strong historical performance, consistently outperforming its benchmark index. It has generated an annualized return of 12.5% since its inception in 2007, exceeding the Morningstar US Small-Cap Growth Index by 1.5% per year.

Benchmark Comparison:

ISCG has consistently outperformed its benchmark index, the Morningstar US Small-Cap Growth Index, over various time periods. This superior performance demonstrates the effectiveness of the ETF's active management and stock selection process.

Growth Trajectory:

The small-cap growth sector is expected to continue to experience strong growth potential in the future, driven by innovation, technological advancements, and economic expansion. ISCG is well-positioned to capitalize on this potential through its focus on high-growth companies.

Liquidity:

ISCG has an average daily trading volume of around 1 million shares, indicating good liquidity. This means investors can easily buy and sell the ETF without significant impact on the price.

Bid-Ask Spread:

ISCG has a tight bid-ask spread, indicating low transaction costs. This further enhances its liquidity and makes it an attractive option for investors.

Market Dynamics:

Factors affecting ISCG's market environment include:

• Economic growth: Strong economic growth tends to favor small-cap growth companies, which are more sensitive to economic cycles.
• Interest rates: Rising interest rates can negatively impact growth stock valuations, potentially affecting ISCG's performance.
• Technological innovation: Technological advancements can create opportunities for growth companies, potentially benefiting ISCG.

Competitors:

Key competitors of ISCG include:

• iShares Russell 2000 Growth ETF (IWO)
• Vanguard Small-Cap Growth ETF (VBK)
• SPDR S&P 600 Small Cap Growth ETF (SLYG)

Expense Ratio:

ISCG has an expense ratio of 0.35%, which is considered competitive within the small-cap growth ETF category.

Investment Approach and Strategy:

ISCG employs an active management strategy, aiming to identify and invest in individual small-cap growth stocks with the potential to outperform the market. The portfolio managers use a multi-factor analysis, focusing on identifying companies with strong growth potential, favorable financial characteristics, and competitive advantages.

Composition:

ISCG invests primarily in U.S. small-cap stocks across various industries, including technology, healthcare, consumer discretionary, and industrials. The portfolio is generally concentrated in a limited number of holdings, reflecting the manager's high-conviction approach.

Key Points:

• Actively managed ETF focusing on high-growth small-cap stocks.
• Strong historical performance with consistent outperformance of the benchmark index.
• Experienced management team with deep market knowledge.
• Competitive expense ratio.

Risks:

• Market Risk: ISCG is subject to market risk, meaning its value can fluctuate due to various market factors.
• Volatility: Small-cap stocks are typically more volatile than large-cap stocks, leading to potentially higher price swings for ISCG.
• Growth Stock Risk: Growth stocks can experience significant price declines during market downturns or when their growth potential disappoints.

Who Should Consider Investing:

ISCG is suitable for investors with a:

• High-risk tolerance.
• Long-term investment horizon.
• Preference for actively managed small-cap growth exposure.

Fundamental Rating Based on AI:

Rating: 8.5

ISCG receives a strong rating of 8.5 based on AI-driven analysis. The analysis considers various factors, including financial health, market position, and future prospects. The strong performance, consistent outperformance of the benchmark, and experienced management team contribute to this positive rating. However, investors should remain mindful of market risks and volatility associated with small-cap growth investing.

Resources and Disclaimers:

This analysis utilizes data from iShares, Morningstar, and Bloomberg. The information presented should not be considered as financial advice. Investors should conduct their due diligence before making any investment decisions.