BlackRock iShares has expanded its line of traditional beta-index exchange traded funds to include the first option to track the benchmark Russell 2500 Index of small- and mid-sized U.S. companies.
On Friday, BlackRock rolled out the iShares Russell 2500 ETF (BATS: SMMD). The ETF comes with a 0.15% expense ratio.
“The Russell 2500 has long been a staple for institutional investors, but lacked a turnkey ETF implementation,” Martin Small, Head of U.S. iShares at BlackRock, said in a note. “SMMD will be the first ETF to bring Russell’s ‘smid’ cap index to the fast-growing ETF market, and aims to provide lower cost efficient exposure to equities with growth potential.”
The Russell 2500 has grown in popularity among institutional-size investors as more managers shifted way from the Russell 2000 as a benchmark for their actively managed portfolios.
The new Russell 2500 ETF tries to reflect the performance of the Russell 2500 Index, which is comprised of 2,500 mid- and small-cap stocks taken from the broader Russell 3000. This new fund will help investors better target specific areas of the market through an easy-to-use investment vehicle.
“An investment in SMMD can be used to complement large-cap holdings and increase diversification,” according to iShares.
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The Russell 2500 Index is made up of 46.8% mid-caps, 38.4% small-caps and 14.4% micro-caps.
Sector allocations include a hefty tilt toward financials 51.8%, along with industrials 9.2%, information technology 8.5%, consumer discretionary 7.5%, real estate 6.3%, health care 5.4%, materials 4.0%, energy 2.6%, utilities 2.2% and consumer staples 1.9%.
Top holdings include Alaska Air Group 0.3%, Advanced Micro Devices 0.3%, Alexandria Real Estate Equities 0.3%, Cooper Inc. 0.3% and E Trade Financial Corp 0.2%.
For more information on new fund products, visit our new ETFs category.