If you're interested in broad exposure to the Small Cap Blend segment of the US equity market, look no further than the iShares Russell 2000 ETF (IWM), a passively managed exchange traded fund launched on May 22, 2000.
The fund is sponsored by Blackrock. It has amassed assets over $78.23 billion, making it one of the largest ETFs attempting to match the Small Cap Blend segment of the US equity market.
Why Small Cap Blend
With more potential comes more risk, and small cap companies, with market capitalization below $2 billion, epitomizes this way of thinking.
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
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 0.19%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.89%.
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 Industrials sector -- about 18.9% of the portfolio. Information Technology and Healthcare round out the top three.
Looking at individual holdings, Bloom Energy Class A Corp (BE) accounts for about 0.99% of total assets, followed by Fabrinet (FN) and Coeur Mining Inc (CDE).
The top 10 holdings account for about 5.62% of total assets under management.
Performance and Risk
IWM seeks to match the performance of the Russell 2000 Index before fees and expenses. The Russell 2000 Index measures the performance of the small capitalization sector of the U.S. equity market.
The ETF return is roughly 16.01% so far this year and was up about 41.56% in the last one year (as of 05/25/2026). In the past 52-week period, it has traded between $202.56 and $286.80.
The ETF has a beta of 1.11 and standard deviation of 20.85% for the trailing three-year period, making it a medium risk choice in the space. With about 1941 holdings, it effectively diversifies company-specific risk.
Alternatives
iShares Russell 2000 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, IWM is an outstanding option for investors seeking exposure to the Style Box - Small Cap Blend segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Vanguard Small-Cap Index Fund ETF Shares (VB) and the iShares Core S&P Small-Cap ETF (IJR) track a similar index. While Vanguard Small-Cap Index Fund ETF Shares has $77.47 billion in assets, iShares Core S&P Small-Cap ETF has $102.63 billion. VB has an expense ratio of 0.03% and IJR charges 0.06%.
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 Russell 2000 ETF (IWM): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).