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the iShares S & P Small Cap ETF (ASX: IJR) is one of the cheapest ASX ETFs on the market and offers both dividends and strong capital growth. Is this the perfect solution for small caps?
About ETFs
Australian Exchange Traded Funds, or ASX ETFs, are publicly traded investment funds and offering exposure to a range of stocks or assets during a single purchase. The video below explains the ETFs in more detail.
iShares Small Cap ETFs
The iShares S & P Small Cap ETF is a Track Index ETF designed to match the performance of the Fund. S & P Small-Cap 600 index. The companies in this index are selected for their size, liquidity and group representation.
The IJR ETF itself holds positions in just over 600 US companies, with the highest weighting being only 0.66%.
The companies are spread over several sectors, with around 18% of industrial, 17.6% of financial and 15% of information technology. Materials, energy and utilities all receive a weight of less than 5%. Thus, the benefits of diversification should be quite high if they are associated with, say, a ASX 200 ETF.
The YRT ETF has lost 9.07% over the last year, but over the last 10 years, the average yield (including dividends) has been 15.7% per annum. Since its inception in October 2007, the YRI has recorded a return of 8.57% per annum, which is quite impressive considering the GFC.
Dividends are paid quarterly and the current 12-month yield is 1.22%.
Costs and risks
IJR ETF is of a very low cost, with a management fee of only 0.07% per annum. In my opinion, this is one of the most attractive features of this ETF.
In terms of risk, small cap stocks tend to be more volatile than large caps and can often suffer heavier losses in a recession, although the benefit of diversification from 600 holdings reduces this risk. of volatility.
The IJR ETF should be considered high risk and may not evolve much more than the norm. S & P 500 AND F.
My take on IJR
This is a very low-cost ETF that looks well diversified across sectors. It has already proven itself by reaching its benchmark over a long period of time and is large enough to provide liquidity. As a small-cap ETF, it should be considered high risk, but it is certainly worth considering as an ETF to add to the portfolio.
Check out our free report below.
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Disclaimer: All information in this article is limited to general financial / investment advice. The information has not taken into account your needs, goals or specific objectives, we invite you to consult a trusted and trusted advisor before acting on this information. Please read the Rask Group Financial Services Guide for more information. This article is authorized by Owen Raszkiewicz of Rask Group, authorized representative of Strawman Pty Ltd Company # 1264179 (ACN: 610 908 211) (AFSL: 501 223).
Disclosure: At the time of writing this article, Max holds no shares in any of the companies mentioned.
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