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Small-Cap ETFs: Look to Undervalued US Equities for Strong Value Potential

The iShares Russell 2000 Value ETF (IWN) focuses on small US equities that are market bargains

As ETFs have grown in prominence to become staples in institutional portfolios over the last two decades, asset managers have sought value opportunities during the long bull market while aiming to maintain liquidity, lower costs and navigate exposure to volatility. Small-cap US equities have long provided the backbone for this approach, offering wide choices in risk and growth mixes to investors. These exposures can be especially key during dynamic market conditions, which frequently see small innovative companies become influential powers in their sectors due to rapidly evolving technologies, consumer buying habits, and business-to-business preferences.

While institutional investors have varying criteria and motivations for adding ETFs to their portfolios, they all want access to ETFs that seek to track high quality, institutionally preferred indexes – such as FTSE Russell. ETFs offer precise exposure and potential for liquidity during periods of heightened market volatility, like the conditions in 2020.

Investors seeking to add high-value characteristics to their portfolios, to either diversify or tilt towards value, often look to small-cap equities in the US that are seen as undervalued relative to comparable businesses. This approach is a core strategy of the iShares Russell 2000 Value ETF (IWN).

This value ETF is one of three small-cap iShares FTSE Russell ETFs. IWN offers institutional investors targeted access to a specific category of small-cap domestic stocks, and seeks to track the investment results of the Russell 2000 Value Index – which is composed of small-cap U.S. equities exhibiting value characteristics. In addition to the IWN ETF, the other two small-cap ETFs are the IWM (iShares Russell 2000 ETF) and the IWO (iShares Russell 2000 Growth ETF). Altogether, these three iShares small-cap ETFs account for more than $96 billion in total AUM as of the end of August, 2021.1

IWN spreads its top five sector exposures across Financials, Industrials, Real Estate, Health Care and Consumer Discretionary (see table below). with an expense ratio of 0.24%.

As of August 12, 2021, IWN had net assets of $15,640,470,874 and a 30-day average volume of $1,646,621.00

Since the inception of IWN in July 2000, the Russell 2000 Value Index, which IWN seeks to track, has outperformed the Russell 2000, its parent index.2

For institutional investors seeking to use ETFs for core allocation, tactical adjustments, rebalancing, managing liquidity or other needs, iShares Russell ETFs provide reliable tools to help calibrate risk, and deliver transparency that they demand. And IWN, with more than 21 years of proven results, can be an effective choice for institutions seeking to add a strong value-oriented ETF to their portfolios.

See the charts below for more details about the iShares Russell 2000 Value ETF (IWN). You can find more info on this ETF here.

iShares

Carefully consider the Funds' investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the Funds' prospectuses or, if available, the summary prospectuses which may be obtained by visiting www.iShares.com or www.blackrock.com. Read the prospectus carefully before investing.

Investing involves risk, including possible loss of principal. Small-capitalization companies may be less stable and more susceptible to adverse developments, and their securities may be more volatile and less liquid than larger capitalization companies. There can be no assurance that an active trading market for shares of an ETF will develop or be maintained.

This material represents an assessment of the market environment as of the date indicated; is subject to change; and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding the funds or any issuer or security in particular. The strategies discussed are strictly for illustrative and educational purposes and are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. There is no guarantee that any strategies discussed will be effective.

Index performance is for illustrative purposes only.  Index performance does not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results. Index performance does not represent actual iShares Fund performance. For actual fund performance, please visit www.iShares.com or www.blackrock.com.

There can be no assurance that an active trading market for shares of an ETF will develop or be maintained.

The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).

The iShares Funds are not sponsored, endorsed, issued, sold or promoted by Russell,  nor does this company make any representation regarding the advisability of investing in the Funds. BlackRock is not affiliated with Russell.

BlackRock Investments, LLC distributor, not afiliated with FTSE international Limited or Frank Russell Co.

iSHARES and BLACKROCK are trademarks of BlackRock, Inc., or its subsidiaries in the United States and elsewhere. All other marks are the property of their respective owners.

FOR INSTITUTIONAL USE ONLY – NOT FOR PUBLIC DISTRIBUTION

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