ISCG vs. RZG: Which Small-Cap Growth ETF Is the Better Buy for Investors?

3 weeks ago 20

The iShares Morningstar Small-Cap Growth ETF (NYSEMKT:ISCG) provides a low-cost, highly diversified attack to small-cap growth, portion the Invesco S&P SmallCap 600 Pure Growth ETF (NYSEMKT:RZG) offers a much concentrated strategy.

Both funds people the small-cap maturation conception but physique their portfolios successful antithetic ways. ISCG follows a accepted market-cap-weighted scale of tiny companies, portion RZG screens the S&P SmallCap 600 for stocks with the strongest maturation characteristics -- specified arsenic income growth, net momentum, and terms momentum -- and weights its holdings accordingly.

Snapshot (cost & size)

Beta measures terms volatility comparative to the S&P 500; beta is calculated from five-year monthly returns. The 1-year instrumentality represents full instrumentality implicit the trailing 12 months. Dividend output is the trailing-12-month organisation yield.

ISCG is importantly cheaper, with an disbursal ratio of 0.06%, compared to RZG's 0.35%. ISCG besides offers a somewhat higher dividend output of 0.57%, compared to RZG's 0.42% -- a humble borderline for income-minded investors.

Performance & hazard examination

What's wrong

Launched successful 2004, ISCG tracks a wide scale of small-cap maturation stocks. The money has dense concentrations successful industrials and exertion astatine 23.9% and 22.5%, respectively, arsenic good arsenic healthcare astatine 17.9%. With 933 holdings, it offers extended diversification, minimizing idiosyncratic banal risk. Its largest positions see Sterling Infrastructure (NASDAQ:STRL) astatine 0.8%, Okta (NASDAQ:OKTA) astatine 0.7%, and Guardant Health (NASDAQ:GH) astatine 0.6%.

RZG provides a narrower portfolio of 125 stocks, built from the S&P SmallCap 600 index. This scale uses a growth-score methodology that favors companies with beardown income growth, net momentum, and terms momentum. Its apical assemblage allocations are healthcare astatine 25.1%, exertion astatine 17.3%, and industrials astatine 16.4%. RZG's attack leads to higher attraction than ISCG's, with apical holdings including ACM Research (NASDAQ:ACMR) astatine 3.7%, Powell Industries (NASDAQ:POWL) astatine 2.0%, and Argan (NYSE:AGX) astatine 2.0%. RZG money was launched successful 2006.

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