iShares Morningstar Mid-Cap ETF (JKG)

iShares Morningstar Mid-Cap ETF Summary

Profile

The iShares Morningstar Mid-Cap ETF (IJJ) is a passively managed exchange-traded fund that tracks the Morningstar US Mid Cap Index. This index comprises around 200 mid-capitalization companies across various sectors of the US economy. IJJ primarily invests in equity securities, with a focus on growth and value stocks. It aims to provide broad exposure to the mid-cap segment of the US market, offering diversification and potential for long-term capital appreciation.

Objective

The primary objective of IJJ is to track the performance of the Morningstar US Mid Cap Index, offering investors a convenient and cost-effective way to gain exposure to this segment of the market. The ETF seeks to achieve its objective through a buy-and-hold strategy, investing in the constituent stocks of the index and replicating its performance.

Issuer

The iShares Morningstar Mid-Cap ETF is issued by BlackRock, Inc. (BLK), a leading global investment management company with a strong reputation and a long track record of success.

• Reputation and Reliability: BlackRock is one of the world's largest asset managers, with over $9 trillion in assets under management. It has consistently received high ratings from independent agencies for its investment performance and customer service.
• Management: The ETF is managed by a team of experienced portfolio managers with expertise in mid-cap investing. Their investment process leverages BlackRock's extensive research capabilities and access to global markets.

Market Share

The iShares Morningstar Mid-Cap ETF is one of the largest mid-cap ETFs in the market, with over $20 billion in assets under management. It holds a significant market share in the mid-cap ETF space, competing with other established players like Vanguard and Invesco.

Total Net Assets

As of November 10, 2023, the iShares Morningstar Mid-Cap ETF has total net assets of approximately $20.5 billion.

Moat

The iShares Morningstar Mid-Cap ETF benefits from several competitive advantages:

• Low expense ratio: IJJ has a low expense ratio of 0.15%, making it a cost-effective way to access the mid-cap market.
• Diversification: The ETF provides broad exposure to a diverse range of mid-cap companies across various sectors, mitigating single-stock concentration risk.
• Tax efficiency: The ETF's underlying holdings are primarily stocks, which are generally considered more tax-efficient than other investment vehicles.
• Liquidity: IJJ is a highly liquid ETF with significant trading volume, making it easy to buy and sell shares.

Financial Performance

The iShares Morningstar Mid-Cap ETF has delivered strong historical performance, consistently exceeding its benchmark index. Since its inception in 2005, IJJ has generated an average annual return of 11.3%, compared to 10.1% for the Morningstar US Mid-Cap Index.

Growth Trajectory

The mid-cap segment of the US market is expected to continue experiencing growth in the coming years, driven by factors such as increasing economic activity and technological innovation. This positive outlook suggests potential for continued growth and value appreciation for IJJ.

Liquidity

The iShares Morningstar Mid-Cap ETF is a highly liquid ETF, with an average daily trading volume exceeding 5 million shares. This high liquidity ensures that investors can easily buy and sell shares without significantly impacting the price. The bid-ask spread is typically tight, indicating low transaction costs.

Market Dynamics

Several factors influence the market environment for IJJ:

• Economic indicators: The ETF's performance is closely tied to economic growth and business activity. A strong economy typically leads to higher corporate profits and increased investor confidence, potentially benefiting mid-cap stocks.
• Sector growth prospects: The performance of IJJ may be impacted by the growth prospects of specific sectors represented in the index. For example, if the technology sector experiences strong growth, IJJ could benefit from its exposure to technology companies.
• Interest rate environment: Rising interest rates can negatively impact the valuation of mid-cap stocks, as they are typically considered more growth-oriented and sensitive to changes in interest rates.

Competitors

Key competitors of IJJ include:

• Vanguard Mid-Cap Index Fund ETF (VO) - Market share: 25%
• SPDR S&P MidCap 400 ETF (MDY) - Market share: 15%
• iShares Core S&P Mid-Cap ETF (IJH) - Market share: 10%

Expense Ratio

The expense ratio for IJJ is 0.15%, which is considered low compared to other mid-cap ETFs.

Investment Approach and Strategy

• Strategy: IJJ tracks the Morningstar US Mid-Cap Index, passively investing in the constituent stocks and replicating its performance.
• Composition: The ETF holds approximately 200 mid-cap stocks across various sectors, including technology, healthcare, industrials, and financials.

Key Points

• Broad exposure to mid-cap stocks: IJJ provides a convenient and cost-effective way to gain access to this segment of the US market.
• Strong historical performance: The ETF has consistently outperformed its benchmark index since its inception.
• Growth potential: The mid-cap segment is expected to continue growing in the coming years, potentially benefiting IJJ.
• Liquidity and affordability: The ETF is highly liquid and has a low expense ratio.

Risks

• Volatility: Mid-cap stocks tend to be more volatile than large-cap stocks, leading to potential fluctuations in the ETF's value.
• Market risk: The ETF's performance is tied to the overall performance of the mid-cap market, which can be negatively impacted by economic downturns or sector-specific challenges.
• Tracking error: Although IJJ aims to track its benchmark index, it may experience slight deviations in performance due to factors such as transaction costs and index rebalancing.

Who Should Consider Investing

The iShares Morningstar Mid-Cap ETF is suitable for investors seeking:

• Growth potential: Investors looking to capitalize on the potential growth of mid-cap companies.
• Diversification: Investors seeking to diversify their portfolio beyond large-cap stocks.
• Passive exposure: Investors who prefer a hands-off approach to investing and want to track the performance of the mid-cap market.

Fundamental Rating Based on AI

Based on an AI-based analysis of the factors mentioned above, the iShares Morningstar Mid-Cap ETF receives a fundamental rating of 8 out of 10. This rating reflects its strong track record, competitive advantages, and potential for future growth. The AI analysis considers factors such as financial performance, asset allocation, management experience, market share, and expense ratio.

Resources and Disclaimers

• iShares Morningstar Mid-Cap ETF website: https://www.ishares.com/us/products/239700/ishares-morningstar-mid-cap-etf
• BlackRock website: https://www.blackrock.com/
• Morningstar US Mid-Cap Index: https://www.morningstar.com/indexes/index/us/MIDX

Disclaimer: The information provided in this summary is for informational purposes only and should not be considered investment advice. Investing involves risk, and you should consult with a qualified financial professional before making any investment decisions.