Is iShares Core S&P U.S. Growth ETF a Strong ETF Right Now?

The iShares Core S&P U.S. Growth ETF IUSG made its debut on 07/24/2000, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - All Cap Growth category of the market.

What Are Smart Beta ETFs?

The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.

Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.

However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.

These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.

Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.

Fund Sponsor & Index

The fund is sponsored by Blackrock. It has amassed assets over $18.62 billion, making it the largest ETF in the Style Box - All Cap Growth. Before fees and expenses, this particular fund seeks to match the performance of the S&P 900 Growth Index.

The S&P 900 Growth Index measures the performance of the large and mid-capitalization growth sector of the U.S. equity market.

Cost & Other Expenses

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.04%, making it one of the least expensive products in the space.

The fund has a 12-month trailing dividend yield of 0.79%.

Sector Exposure and Top Holdings

Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.

IUSG's heaviest allocation is in the Information Technology sector, which is about 46.50% of the portfolio. Its Consumer Discretionary and Telecom round out the top three.

When you look at individual holdings, Microsoft Corp accounts for about 12.02% of the fund's total assets, followed by Apple Inc and Nvidia Corp.

IUSG's top 10 holdings account for about 59.39% of its total assets under management.

Performance and Risk

The ETF has added roughly 20% so far this year and was up about 27.52% in the last one year (as of 08/15/2024). In the past 52-week period, it has traded between $91.06 and $133.54.

The ETF has a beta of 1.07 and standard deviation of 21.40% for the trailing three-year period, making it a medium risk choice in the space. With about 488 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares Core S&P U.S. Growth ETF is an excellent option for investors seeking to outperform the Style Box - All Cap Growth segment of the market. There are other ETFs in the space which investors could consider as well.

Fidelity Blue Chip Growth ETF FBCG tracks ---------------------------------------- and the iShares Morningstar Growth ETF ILCG tracks MORNINGSTAR US LARGE-MID CP BRD GRWTH ID. Fidelity Blue Chip Growth ETF has $1.90 billion in assets, iShares Morningstar Growth ETF has $2.23 billion. FBCG has an expense ratio of 0.59% and ILCG charges 0.04%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - All Cap Growth.

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