iShares MSCI EAFE Small-Cap ETF (SCZ)

ETF iShares MSCI EAFE Small-Cap ETF (SCZ) Overview:

Profile:

iShares MSCI EAFE Small-Cap ETF (SCZ) is an exchange-traded fund that tracks the performance of the MSCI EAFE Small Cap Index. This index includes small-cap companies from developed markets outside the United States and Canada, such as Europe, Japan, and Australia. SCZ provides investors with a diversified exposure to small-cap stocks in international developed markets.

Objective:

The primary investment goal of SCZ is to track the performance of the MSCI EAFE Small Cap Index, offering investors a cost-effective way to access a broad basket of international small-cap stocks.

Issuer:

iShares:

iShares is a leading global provider of exchange-traded funds (ETFs) with over $2.7 trillion in assets under management. They are part of BlackRock, the world's largest asset manager, known for its strong reputation and track record in the financial market.

Management:

iShares ETFs are managed by experienced portfolio managers who utilize sophisticated investment strategies and quantitative models to achieve their stated objectives.

Market Share:

SCZ has a market share of approximately 5% within the international small-cap equity ETF category.

Total Net Assets:

As of November 2023, SCZ has approximately $2.5 billion in total net assets.

Moat:

• Diversification: SCZ provides exposure to a wide range of international small-cap stocks, mitigating concentration risk and offering investors diversification benefits.
• Liquidity: SCZ has a relatively high average daily trading volume, ensuring easy entry and exit for investors.
• Low Cost: SCZ has a low expense ratio compared to other actively managed international small-cap funds, making it a cost-effective investment option.

Financial Performance:

• Historical Performance: SCZ has historically delivered positive returns, outperforming its benchmark index in some periods.
• Benchmark Comparison: SCZ has generally tracked its benchmark index closely, with periods of outperformance and underperformance.

Growth Trajectory:

• International Small-Cap Growth: The international small-cap market is expected to experience moderate growth in the long run, driven by economic expansion in developed countries.
• ETF Industry Growth: The ETF industry is experiencing steady growth, with increasing investor demand for diversified and cost-effective investment solutions.

Liquidity:

• Average Trading Volume: SCZ has an average daily trading volume of approximately 100,000 shares, indicating good liquidity.
• Bid-Ask Spread: SCZ has a narrow bid-ask spread, implying low transaction costs.

Market Dynamics:

• Economic Growth: Global economic growth prospects can impact the performance of international small-cap stocks.
• Interest Rate Environment: Rising interest rates can negatively affect small-cap stocks.
• Investor Sentiment: Market sentiment towards international small-cap stocks can influence demand for SCZ.

Competitors:

• iShares Core MSCI EAFE Small-Cap ETF (ISZE)
• Vanguard FTSE Developed Markets Small-Cap ETF (VSS)
• SPDR S&P International SmallCap 600 ETF (IJR)

Expense Ratio:

SCZ has an expense ratio of 0.39%.

Investment Approach and Strategy:

• Strategy: SCZ passively tracks the MSCI EAFE Small Cap Index.
• Composition: The ETF holds a diversified portfolio of approximately 600 small-cap stocks from developed markets outside North America.

Key Points:

• Diversified exposure to international small-cap stocks.
• Low cost investment option.
• Potential for higher returns compared to large-cap counterparts.
• Subject to market risks and volatility.

Risks:

• Volatility: International small-cap stocks are generally more volatile than large-cap stocks.
• Market Risk: The value of SCZ can fluctuate based on market conditions and economic factors affecting international small-cap companies.
• Currency Risk: SCZ is exposed to currency risk due to its investment in foreign markets.

Who Should Consider Investing:

• Investors seeking long-term growth potential.
• Investors comfortable with higher volatility.
• Those seeking diversification within their international equity portfolio.

Fundamental Rating Based on AI (1-10):

8.5

SCZ receives a high score due to its strong fundamentals. It provides investors with diversified exposure to a large universe of international small-cap stocks at a low cost. While subject to market risk and volatility, the ETF offers the potential for attractive long-term returns for suitable investors.

Resources and Disclaimers:

Information for this analysis was sourced from iShares website, ETF.com, and Morningstar. Remember, this information should not be considered as financial advice. Please conduct thorough research and consult a financial advisor before making investment decisions.