Designed to provide broad exposure to the Small Cap Growth segment of the US equity market, the iShares Morningstar Small-Cap Growth ETF (ISCG) is a passively managed exchange traded fund launched on June 28, 2004.
The fund is sponsored by Blackrock. It has amassed assets over $1.03 billion, making it one of the average sized ETFs attempting to match the Small Cap Growth segment of the US equity market.
Why Small Cap Growth
Sitting at a market capitalization below $2 billion, small cap companies tend to be high-potential stocks compared to its large and mid cap counterparts, but come with higher risk.
Qualities of growth stocks include faster growth rates compared to the broader market, as well as higher valuations and higher than average sales and earnings growth rates. Something to keep in mind is the higher level of volatility that is affiliated with growth stocks. Compared to value stocks, growth stocks are a safer bet in a strong bull market, but don't perform as strongly in almost all other financial environments.
Costs
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
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 0.58%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Industrials sector -- about 26.4% of the portfolio. Information Technology and Healthcare round out the top three.
Looking at individual holdings, Lumentum Holdings Inc (LITE) accounts for about 2.09% of total assets, followed by Ati Inc (ATI) and Rbc Bearings Inc (RBC).
Performance and Risk
ISCG seeks to match the performance of the MORNINGSTAR US SML CP BRD GRWTH EXTD ID before fees and expenses. The Morningstar US Small Cap Broad Growth Extended Index comprises of small-capitalization U.S. equities that exhibit growth characteristics.
The ETF has gained about 15.3% so far this year and is up about 33.27% in the last one year (as of 06/23/2026). In the past 52-week period, it has traded between $48.76 and $63.77.
The ETF has a beta of 1.13 and standard deviation of 20.22% for the trailing three-year period. With about 962 holdings, it effectively diversifies company-specific risk.
Alternatives
iShares Morningstar Small-Cap Growth 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, ISCG is a great option for investors seeking exposure to the Style Box - Small Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell 2000 Growth ETF (IWO) and the Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) track a similar index. While iShares Russell 2000 Growth ETF has $15.23 billion in assets, Vanguard Small-Cap Growth Index Fund ETF Shares has $24.08 billion. IWO has an expense ratio of 0.24% and VBK 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 Small-Cap Growth ETF (ISCG): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).