The iShares Core S&P U.S. Growth ETF (IUSG), launched on July 24, 2000, is a smart beta exchange-traded fund that provides broad exposure to the Style Box – All Cap Growth category of the U.S. stock market. It stands out as the largest ETF in this category, boasting over $18.62 billion in assets.
What are Smart Beta ETFs?
Traditional exchange-traded funds (ETFs) typically track market capitalization-weighted indexes, mirroring the overall market or specific segments. This approach suits investors who believe in market efficiency. However, some investors seek to outperform the market by meticulously selecting stocks based on specific criteria. Smart beta ETFs cater to this need by tracking indexes that employ non-cap weighted strategies. These strategies focus on identifying stocks with promising risk-return profiles, drawing on fundamental characteristics like profitability, growth, or a combination of factors.
IUSG: A Closer Look
IUSG, sponsored by BlackRock, aims to match the performance of the S&P 900 Growth Index. This index gauges the performance of the large and mid-cap growth segment within the U.S. equity market. Notably, IUSG carries an annual operating expense ratio of just 0.04%, making it one of the most cost-efficient options in its category. It also offers a 12-month trailing dividend yield of 0.79%.
Sector Exposure and Top Holdings
IUSG’s portfolio is transparent and publicly disclosed daily. Its heaviest allocation is in the Information Technology sector, accounting for approximately 46.50% of the portfolio. The Consumer Discretionary and Telecom sectors round out the top three. In terms of individual holdings, Microsoft Corp holds the largest position at roughly 12.02%, followed by Apple Inc and Nvidia Corp. The top 10 holdings collectively represent about 59.39% of IUSG’s total assets under management.
Performance and Risk
IUSG has delivered strong returns, adding about 20% in the current year and 27.52% over the past year (as of August 15, 2024). The ETF’s price has ranged from $91.06 to $133.54 in the past 52 weeks. Over the trailing three-year period, IUSG exhibits a beta of 1.07 and a standard deviation of 21.40%, suggesting a medium risk profile. With approximately 488 holdings, the ETF effectively diversifies company-specific risk.
Alternatives
While IUSG presents a compelling choice for investors seeking to outperform the Style Box – All Cap Growth segment, alternative ETFs in this space are worth considering. The Fidelity Blue Chip Growth ETF (FBCG) tracks [INDEX NAME] and the iShares Morningstar Growth ETF (ILCG) tracks MORNINGSTAR US LARGE-MID CP BRD GRWTH ID. FBCG holds $1.90 billion in assets, while ILCG manages $2.23 billion. FBCG charges an expense ratio of 0.59%, whereas ILCG carries a fee of 0.04%. For investors prioritizing lower costs and risk, traditional market cap weighted ETFs that align with the returns of the Style Box – All Cap Growth segment could be an alternative.
