Looking for broad exposure to the Small Cap Value segment of the US equity market? You should consider the iShares Morningstar Small-Cap Value ETF (ISCV), a passively managed exchange traded fund launched on June 28, 2004.
The fund is sponsored by Blackrock. It has amassed assets over $681.12 million, making it one of the average sized ETFs attempting to match the Small Cap Value segment of the US equity market.
Why Small Cap Value
With more potential comes more risk, and small cap companies, with market capitalization below $2 billion, epitomizes this way of thinking.
Value stocks have lower than average price-to-earnings and price-to-book ratios. They also have lower than average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.
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 0.06%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.84%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector -- about 24.2% of the portfolio. Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Cf Industries Holdings Inc (CF) accounts for about 0.72% of total assets, followed by Alcoa Corp (AA) and Ovintiv Inc (OVV).
The top 10 holdings account for about 5.68% of total assets under management.
Performance and Risk
ISCV seeks to match the performance of the MORNINGSTAR US SML CP BRD VLUE EXTD INDX before fees and expenses. The Morningstar US Small Cap Broad Value Extended Index comprises of small-capitalization U.S. equities that exhibit value characteristics.
The ETF has added roughly 15.91% so far this year and was up about 25.42% in the last one year (as of 07/06/2026). In the past 52-week period, it has traded between $61.33 and $78.79.
The ETF has a beta of 0.99 and standard deviation of 19.1% for the trailing three-year period. With about 1079 holdings, it effectively diversifies company-specific risk.
Alternatives
iShares Morningstar Small-Cap Value ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, ISCV is an excellent option for investors seeking exposure to the Style Box - Small Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell 2000 Value ETF (IWN) and the Vanguard Small-Cap Value Index Fund ETF Shares (VBR) track a similar index. While iShares Russell 2000 Value ETF has $14.37 billion in assets, Vanguard Small-Cap Value Index Fund ETF Shares has $36.74 billion. IWN has an expense ratio of 0.24% and VBR charges 0.05%.
Bottom-Line
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
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 Small-Cap Value ETF (ISCV): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).