Should iShares Morningstar MidCap ETF (IMCB) Be on Your Investing Radar?

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Launched on 06/28/2004, the iShares Morningstar MidCap ETF (IMCB) is a passively managed exchange traded fund designed to provide a broad exposure to the Mid Cap Blend segment of the US equity market.

– Zacks

The fund is sponsored by Blackrock. It has amassed assets over $887.90 million, making it one of the average sized ETFs attempting to match the Mid Cap Blend segment of the US equity market.

Why Mid Cap Blend

With market capitalization between $2 billion and $10 billion, mid cap companies usually contain higher growth prospects than large cap companies, and are considered less risky than their small cap counterparts. Thus, companies that fall under this category provide a stable and growth-heavy investment.

Typically holding a combination of both growth and value stocks, blend ETFs also demonstrate qualities seen in value and growth investments.

Costs

When considering an ETF’s total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

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

It has a 12-month trailing dividend yield of 1.10%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund’s holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Information Technology sector–about 19.70% of the portfolio. Industrials and Consumer Discretionary round out the top three.

Looking at individual holdings, Dexcom Inc (DXCM) accounts for about 0.64% of total assets, followed by Airbnb Inc Class A (ABNB) and Marvell Technology Inc (MRVL).

The top 10 holdings account for about 5.34% of total assets under management.

Performance and Risk

IMCB seeks to match the performance of the MORNINGSTAR US MID CAP INDEX before fees and expenses. The Morningstar US Mid Cap Index comprises of mid-capitalization U.S. equities.

The ETF return is roughly 21.21% so far this year and it’s up approximately 22.10% in the last one year (as of 12/24/2021). In the past 52-week period, it has traded between $57.59 and $72.78.

The ETF has a beta of 1.10 and standard deviation of 26.13% for the trailing three-year period. With about 570 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares Morningstar MidCap ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, IMCB is a sufficient option for those seeking exposure to the Style Box – Mid Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.

The Vanguard MidCap ETF (VO) and the iShares Core S&P MidCap ETF (IJH) track a similar index. While Vanguard MidCap ETF has $56.28 billion in assets, iShares Core S&P MidCap ETF has $67 billion. VO has an expense ratio of 0.04% and IJH charges 0.05%.

Bottom-Line

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

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iShares Morningstar MidCap ETF (IMCB): ETF Research Reports

DexCom, Inc. (DXCM): Free Stock Analysis Report

Marvell Technology, Inc. (MRVL): Free Stock Analysis Report

iShares Core S&P MidCap ETF (IJH): ETF Research Reports

Vanguard MidCap ETF (VO): ETF Research Reports

Airbnb, Inc. (ABNB): Free Stock Analysis Report

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Zacks Investment Research