Is iShares S&P Small-Cap ETF (ASX:IJR) Too Risky?

The iShares S&P Small-Cap ETF (ASX: IJR) is one of the lowest-cost ASX ETFs on the market and provides both dividends and strong capital growth. Is it the perfect small-cap solution?

What Are Index Funds & ETFs?

Australian or ASX ETFs are investment funds which can be bought or sold on a stock exchange and provide exposure to a range of shares or assets with a single investment. The podcast episode below explains index funds, ETFs and managed funds in more detail.

What Is The iShares IJR ETF?

The iShares S&P Small-CAP ETF is an index-tracking ETF that aims to match the performance of the S&P Small-Cap 600 index. The companies in this index are selected for their liquidity, size and industry representation. Right now, the IJR ETF has positions in around 600 US companies, with the highest weighting given to any company only 0.66%.

These US companies are spread across industries, with around 18% industrials, 17.6% financials, and 15% information technology. Materials, energy and utilities all receive less than a 5% weighting each. So, diversification benefits should be quite high if paired with, say, an ASX 200 ETF.

The IJR ETF has fallen down on performance over the last year, losing 9.07%, but over the last 10 years, the average return (including dividends) has been 15.7% per year. Going back to inception in October 2007, IJR has returned 8.57% per year, which is fairly impressive given that includes the GFC.

IJR pays dividends quarterly, with the current 12-month trailing yield is 1.22%.

IJR Fees & Risks

The IJR ETF is very low cost, with a management fee of only 0.07% per year. In my opinion, this is one of the most attractive features of this ETF.

In terms of risks, small-cap shares tend to be more volatile than large-caps and can often suffer heavier losses in a downturn, although the diversification benefit from 600 holdings does reduce this volatility risk.

The IJR ETF should be considered high-risk and is likely to move a lot more than a standard S&P 500 ETF.

What I Think Of IJR

IJR is a low-cost index fund ETF which is well-diversified across industries, has a proven track record of meeting its benchmark over a long-time period and is large enough to provide liquidity. As a small-cap ETF, it should be considered higher risk, but it’s worth considering for long-term growth.

For our number one ETF pick, check out the free report below.

Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.

From 200+ ETFs in Australia, our top investment analyst has just identified his #1 ETF for 2021 and beyond.

Low fees? Check.

Long-term growth potential? Check.

Regular cash returns? Check!

This ETF makes investing in ETFs "Super-Easy".

Simply click here or enter your email address below to access the full ETF report, ticker code, and step-by-step investment guide. Our expert's #1 ETF report is completely free.

No gimmicks, no payment, no credit card info. Just enter your email address below and we'll send you the report right away.

From 200+ ETFs in Australia, our top investment analyst has just identified his #1 ETF for 2021 and beyond.

Low fees? Check.

Long-term growth potential? Check.

Regular cash returns? Check!

This ETF makes investing in ETFs "Super-Easy".

Simply click here to access the full ETF report, ticker code, and step-by-step investment guide. Our expert's #1 ETF report is completely free.

No gimmicks, no payment, no credit card info. Just click the link below and enter your email address. We'll send you the report right away.

CLICK HERE TO GET THE REPORT

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

Keep reading:

General Financial Advice warning
The information on this website is general financial advice only. That means, the advice does not take into account your objectives, financial situation or needs. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. Please read our Terms & Conditions and Financial Services Guide before using this website.

© Rask Australia 2020

Join 20,000+ smart investors

Join the Rask Australia mailing and we’ll send you free investment reports, podcasts, expert insights, investing courses, ASX news and lots, lots more. All free. 

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian-owned.

feedback-icon

What can we do better?

Howdy, ASX investor.

I really care about your experience today.

Please, let me know if you have any suggestions we can use to improve our site and help others invest in ETFs. 

Cheers! 

Owen Rask