iShares Russell 2000 Growth ETF: A Key for Small Cap Growth Exposure

Investing in small-cap companies can bring diversification and growth potential to a portfolio, making the iShares Russell 2000 Growth ETF (IWO) a compelling option for investors seeking these qualities.

What is the iShares Russell 2000 Growth ETF?

IWO is an exchange-traded fund (ETF) that tracks the Russell 2000 Growth Index. This index consists of the 1,000 smallest companies within the Russell 3000 Index, a broad market index that represents approximately 98% of U.S. equity markets. IWO provides exposure to small-cap companies that are expected to experience above-average growth compared to the broader market.

Key Features of IWO

• Ticker: IWO
• Expense Ratio: 0.19%
• Total Net Assets: $10.5 billion (as of February 28, 2023)
• Dividend Yield: 1.08% (as of February 28, 2023)
• Tracking Index: Russell 2000 Growth Index

Why Invest in IWO?

1. Small-Cap Growth Potential:
Small-cap growth companies often have higher growth potential compared to large-cap companies, making IWO a viable option for investors seeking long-term capital appreciation.

2. Diversification:
IWO provides diversification away from large-cap stocks, reducing overall portfolio risk while capturing the potential for higher returns.

3. Liquidity and Convenience:
As an ETF, IWO offers high liquidity and convenience, making it easy for investors to buy and sell shares at fair prices.

Performance and Returns

Since its inception in May 1999, IWO has generated an average annual return of 11.3%, outperforming the Russell 2000 Growth Index and the S&P 500 Index.

Average Annual Returns:

Company Composition

IWO holds a diversified portfolio of small-cap growth companies across various industries. The top 10 holdings as of February 28, 2023, include:

Investing in IWO

Investors can purchase IWO through their brokerage accounts using the ticker symbol "IWO." IWO is suitable for investors with a long-term horizon and a tolerance for higher risk.

Pros and Cons of IWO

Pros:

• Exposure to small-cap growth potential
• Diversification away from large-cap stocks
• Liquidity and convenience

Cons:

• Higher volatility compared to large-cap indices
• Expense ratio slightly higher than some other ETFs

Alternatives to IWO

• iShares Russell 2000 Value ETF (IWN): Tracks the Russell 2000 Value Index, offering exposure to small-cap value stocks.
• Vanguard Small-Cap Growth ETF (VBK): Tracks the CRSP US Small Cap Growth Index, providing similar exposure to IWO with a lower expense ratio.
• SPDR S&P 600 Small Cap Growth ETF (SLYG): Tracks the S&P 600 Small Cap Growth Index, offering exposure to the smaller end of the small-cap market.

Conclusion

The iShares Russell 2000 Growth ETF (IWO) is an attractive option for investors seeking diversification, small-cap growth potential, and liquidity. With its low expense ratio, IWO provides a convenient and cost-effective way to gain exposure to this segment of the market. While IWO is suitable for investors with a higher risk tolerance, its long-term performance and growth potential make it a valuable addition to a diversified portfolio.