If you're interested in broad exposure to the Small Cap Blend segment of the US equity market, look no further than the iShares Morningstar Small-Cap ETF (ISCB), a passively managed exchange traded fund launched on June 28, 2004.
The fund is sponsored by Blackrock. It has amassed assets over $266.99 million, making it one of the average sized ETFs attempting to match the Small Cap Blend segment of the US equity market.
Why Small Cap Blend
There's a lot of potential to investing in small cap companies, but with market capitalization below $2 billion, that high potential comes with even higher risk.
Blend ETFs are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.
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 one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.3%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. 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 19.6% of the portfolio. Financials and Information Technology round out the top three.
Looking at individual holdings, Lumentum Holdings Inc (LITE) accounts for about 1.01% of total assets, followed by Cf Industries Holdings Inc (CF) and Albemarle Corp (ALB).
The top 10 holdings account for about 3.99% of total assets under management.
Performance and Risk
ISCB seeks to match the performance of the MORNINGSTAR US SMALL CAP EXTENDED INDEX before fees and expenses. The Morningstar US Small Cap Extended Index comprises of small-capitalization U.S. equities.
The ETF has added about 8.4% so far this year and is up roughly 30.86% in the last one year (as of 05/05/2026). In the past 52-week period, it has traded between $53.65 and $71.11.
The ETF has a beta of 1.07 and standard deviation of 19.46% for the trailing three-year period. With about 1560 holdings, it effectively diversifies company-specific risk.
Alternatives
iShares Morningstar Small-Cap 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, ISCB is a good option for those seeking exposure to the Style Box - Small Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 2000 ETF (IWM) and the iShares Core S&P Small-Cap ETF (IJR) track a similar index. While iShares Russell 2000 ETF has $76.76 billion in assets, iShares Core S&P Small-Cap ETF has $101.85 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.
Bottom-Line
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds 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.
Boost Your Portfolio with Our Top ETF Insights
Zacks' exclusive Fund Newsletter delivers actionable information, top news and analysis, as well as top-performing ETFs, straight to your inbox every week.
Don’t miss out on this valuable resource. It’s free!
Get it now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
iShares Morningstar Small-Cap ETF (ISCB): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).