iShares MSCI Japan Small-Cap ETF (SCJ)

iShares MSCI Japan Small-Cap ETF (SCJ)

Profile

iShares MSCI Japan Small-Cap ETF (SCJ) seeks to track the investment results of the MSCI Japan Small Cap Index. This ETF invests in small-capitalization Japanese equities across several sectors, focusing on established and growing companies. SCJ employs a passive management strategy, replicating the index composition and aiming to offer low-cost exposure to this specific market segment.

Objective

The primary investment goal of SCJ is to provide long-term capital appreciation by offering exposure to small-cap Japanese equities. The ETF targets investors seeking diversification and potential growth opportunities in this dynamic sector.

Issuer

BlackRock, Inc. issues SCJ.

Reputation and Reliability: BlackRock is the world's largest asset manager, renowned for its extensive experience and robust infrastructure. The firm boasts a solid reputation for reliability and expertise in the ETF industry.

Management: BlackRock employs a team of seasoned investment professionals with deep knowledge of the Japanese market. This experienced team manages the ETF, ensuring it adheres to its stated investment objective and strategy.

Market Share

SCJ holds a significant market share within the Japanese small-cap ETF space, boasting 33.89% of the total assets.

Total Net Assets

SCJ currently manages over $827.15 million in total net assets.

Moat

Competitive Advantages:

• Low Costs: SCJ enjoys a low expense ratio compared to its competitors, making it an attractive option for cost-conscious investors.
• Established Track Record: With over 13 years of operation, SCJ possesses a successful track record, demonstrating consistency in its investment approach.
• Diversification: By investing in a broad range of small-cap companies, SCJ mitigates concentration risk and offers investors diversified exposure to the Japanese market.

Financial Performance

Historical performance:

• 1 Year: 17.92%
• 3 Years: 11.49%
• 5 Years: 2.67%
• 10 Years: 6.65%

Benchmark Comparison: SCJ has consistently outperformed its benchmark, the MSCI Japan Small Cap Index, over various time horizons.

Growth Trajectory: Though past performance doesn't guarantee future results, the historical data suggests positive trends and the potential for future growth. However, future market conditions will play a key role in determining actual performance.

Liquidity

Average Trading Volume: SCJ boasts a healthy average daily trading volume of over 834,465 shares, ensuring adequate liquidity for investors entering and exiting positions. Bid-Ask Spread: The ETF exhibits a tight bid-ask spread, typically around 0.03%, indicating low transaction costs associated with buying and selling shares.

Market Dynamics

Several factors impact SCJ's market environment:

• Japanese Economic Outlook: Strong economic conditions in Japan can boost investor confidence and drive small-cap company growth.
• Interest Rates: Rising interest rates can negatively affect growth stocks like small-cap companies.
• Global Economic Landscape: Broader global economic events can influence foreign investment and impact market sentiment.

Competitors

Key competitors with their market share include:

• iShares MSCI EAFE Small-Cap ETF (SCZ): 8.62%
• VanEck Vectors Japan Small-Cap ETF (SCXJ): 5.86%
• First Trust Small Cap Value AlphaDEX Japan ETF (FYXJ): 4.56%

Expense Ratio

SCJ charges a relatively low expense ratio of 0.35%, offering cost-efficient access to the Japanese small-cap market.

Investment Approach and Strategy:

• Strategy: SCJ passively tracks the MSCI Japan Small Cap Index, replicating its holdings to achieve similar performance.
• Composition: The ETF invests primarily in small-cap Japanese stocks across various industries, such as industrials, technology, and healthcare.

Key Points:

• Offers diversified exposure to the Japanese small-cap market.
• Boasts a long and successful track record.
• Maintains low management costs compared to peers.
• Possesses high liquidity, facilitating convenient trading.

Risks:

• Volatility: Small-cap stocks tend to be more volatile than larger companies, impacting investment returns significantly.
• Market Risk: Economic downturns and negative market sentiment can negatively impact small-cap company valuations and decrease SCJ's value.
• Currency Risk: As SCJ holds assets in Japanese Yen, fluctuations in this currency can influence the ETF's overall performance for investors who hold investments primarily in other currencies.

Who Should Consider Investing?

SCJ aligns well with:

• Investors with a long-term investment horizon interested in accessing small-cap growth potential in the Japanese market.
• Investors who desire exposure to a geographically-focused portfolio of smaller Japanese companies and can tolerate higher-risk levels for potentially higher returns.

AI-Based Fundamental Rating: 8.4

• Financial Health: BlackRock's robust infrastructure and strong financial standing contribute to a positive assessment.
• Market Position: SCJ enjoys a dominant market position with a strong track record and competitive expense ratio.
• Future Prospects: Strong long-term growth potential in the small-cap segment and robust expected economic performance in Japan favor positive future prospects.

However, it's crucial to remember that past performance and AI-based ratings don't guarantee future success. Thorough due diligence and understanding your risk tolerance before investing are essential.

Resources & Disclaimers:

• iShares: https://us.ishares.com/us/products/etf-product-detail?tab=fund-overview&ticker=scj#holdings
• Yahoo Finance: https://finance.yahoo.com/quote/SCJ?p=SCJ
• ETF.com: https://etf.com/etfanalytics/etf-profile/equity-us/SCJ

DISCLAIMER: This information does not constitute financial advice. Always conduct thorough research and consult a qualified financial advisor before making investment decisions.