Need Balanced Mid Cap Value? Give 'IJJ' A Look

Mid cap equities are lauded for their ability to strike a balance between large cap stability and small cap growth. Rather than deep dive into a vast sea of mid cap equities, investors can narrow their exposure to the top 400 value-oriented mid caps with the iShares S&P Mid-Cap 400 Value ETF (IJJ).

IJJ seeks to track the investment results of the S&P MidCap 400 Value IndexTM, which measures the performance of the mid-capitalization value sector of the U.S. equity market. The fund generally invests at least 90% of its assets in securities of the underlying index and in depositary receipts representing securities of the underlying index.

It may invest the remainder of its assets in certain futures, options and swap contracts, cash and cash equivalents, as well as in securities not included in the underlying index, but which the advisor believes will help the fund track the underlying index. The fund lends:

  1. Exposure to U.S. mid cap stocks that are thought to be undervalued by the market relative to comparable companies
  2. Low cost and tax efficiency with a paltry 0.18% expense ratio
  3. Use as a complement to a portfolio’s core holdings
  4. Strong performance, with the fund up almost 40% within the past 12 months

IJJ Chart

Mid Caps Can Help Shield Against Volatility

The major indexes have been seeing a roller coaster ride as of late, as inflation fears and rising yields have spooked investors into sell-offs. Mid caps with a value tilt can help shield against volatility.

“Against such a backdrop, investors seeking to capitalize on the bullish fundamentals but worried about rising yields should consider mid-cap stocks in the basket form. In fact, the mid-cap space has been outperforming over the past month,” a Zacks article published in Nasdaq explained.

“While large companies are normally known for stability and the smaller ones for growth, mid-caps offer the best of both worlds, simultaneously allowing growth and stability in a portfolio,” the article added. “As such, these securities are safer options and have the potential to move higher than the large and small-cap counterparts in turbulent times. Further, mid-cap stocks are less volatile than small caps.”

IJJ seeks value amongst a variety of sectors, including financials, industrials, consumer discretionary, and information technology to round out the top five. The financial sector gets top billing for exposure breakdown, comprising 23% of the fund.

Looking For Value In Midcaps? Give "IJJ" A Look 1

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