A Closer Look At Some Lesser Known Russell 2000 ETFs

February 3, 2017 12:27pm NYSE:IWO

smallcap

We wrote about the Russell 2000 Index trading within shouting distance of yet another new all-time high once again this morning, approaching levels that were reached on an intraday basis back in early December of last year and then once again in both early and late January of this year without another leg higher.


IWM (iShares Russell 2000, Expense Ratio 0.20%, $38.7 billion in AUM) is of course the largest ETF in the Russell 2000 segment, well ahead of two competing funds VTWO (Vanguard Russell 2000, Expense Ratio 0.15%, $948 million in AUM) and TWOK (SPDR Russell 2000, Expense Ratio 0.12%, $159 million in AUM).

Today however we would like to look at the “Growth” and “Value” segments of the Russell 2000, given what seems to be potential trading opportunity in the case of an additional breakout to the upside here. IWN (iShares Russell 2000 Value, Expense Ratio 0.25%) is no slouch in terms of asset size with $8.6 billion in AUM presently, and neither is its sister ETF IWO (iShares Russell 2000 Growth, Expense Ratio 0.25%, $7 billion in AUM).

It is a worthwhile exercise to dissect the underlying portfolios of both IWN and IWO to get a sense of companies that are categorized as “Growth” or “Value” given the little analyst coverage that is devoted to many of these Small-Cap names. For example, when we look at the top five holdings of IWM itself we see some familiar names, but only because some of these companies are fallen angels in a sense (AMD) that were once companies of larger market caps that fell on hard times, and seem to be rebounding in the present: 1) AMD (0.36%), 2) MSCC (0.34%), 3) WBS (0.25%), 4) CC (0.25%), and 5) CW (0.24%).

IWN has a different look as one might expect having a “Value” slant, and the underlying portfolio contains 1,356 small-cap names. Top holdings are 1) WBS (0.48%), 2) PB (0.47%), 3) RSPP (0.46%), 4) XPO (0.46%), and 5) OLN (0.45%). IWO being a “Growth” oriented fund has top weightings as follows: 1) MSCC (0.71%), 2) AZPN (0.50%), 3) OZRK (0.49%), 4) TTWO (0.47%), and 5) CC (0.43%) and the underlying portfolio contains 1,163 names.

One takeaway here is that we see some names replicated in terms of their heavier exposure in both the Russell 2000 as well as within either the Russell 2000 Value or Growth, and it is helpful to know which individual companies may be helping to drive performance of these indices higher (i.e. MSCC, WBS, CC for instance).

IWO-2017-02-03

The iShares Russell 2000 Growth Index ETF (NYSE:IWO) was trading at $157.67 per share on Friday afternoon, up $1.87 (+1.20%). Year-to-date, IWO has gained 2.42%, versus a 2.61% rise in the benchmark S&P 500 index during the same period.

IWO currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 15 ETFs in the Small Cap Growth ETFs category.


Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch

paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.


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