IMCG: We Think Large-Cap Growth Is Better

seekingalpha2024-06-07

ivotheeditors ETF Overview iShares Morningstar Mid-Cap Growth ETF (NYSEARCA:IMCG) has a portfolio of U.S. mid-cap growth stocks. The fund has outperformed other mid-cap growth funds but underperformed...

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The fund has outperformed other mid-cap growth funds but underperformed...</p>\n\n<a href=\"https://seekingalpha.com/article/4697911-imcg-etf-we-think-large-cap-growth-is-better\">Source Link</a>\n\n</div>\n","source":"seekingalpha_fund","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>IMCG: We Think Large-Cap Growth Is Better</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIMCG: We Think Large-Cap Growth Is Better\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-06-07 09:18 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4697911-imcg-etf-we-think-large-cap-growth-is-better><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>ivotheeditors ETF Overview iShares Morningstar Mid-Cap Growth ETF (NYSEARCA:IMCG) has a portfolio of U.S. mid-cap growth stocks. The fund has outperformed other mid-cap growth funds but underperformed...</p>\n\n<a href=\"https://seekingalpha.com/article/4697911-imcg-etf-we-think-large-cap-growth-is-better\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4550","symbol_name":"红杉资本持仓","start_time":0,"source_url":"https://seekingalpha.com/article/4697911-imcg-etf-we-think-large-cap-growth-is-better","article_id":"2441983706","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1333020529/image_1333020529.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2441983706","pubTimestamp":1717723105,"columns":[],"sourceInfo":{"source_id":"seekingalpha_fund","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"ivotheeditors ETF Overview iShares Morningstar Mid-Cap Growth ETF (NYSEARCA:IMCG) has a portfolio of U.S. mid-cap growth stocks. 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The fund has outperformed other mid-cap growth funds but underperformed other large-cap growth funds. This underperformance was due to its lower exposure to technology stocks. Looking forward, the fund will likely continue to underperform its large-cap growth peers not only due to its lower exposure to technology stocks, but also due to the rise of passive investing which tend to favor large-cap stocks. Hence, we think investors seeking higher total returns should pick large-cap growth funds instead. YCharts Fund Analysis Despite its strong performance, IMCG has yet to reach the record set in late 2021 IMCG has delivered strong performance in this bull market so far. In fact, since reaching the cyclical low in October 2022, the fund has delivered a price return and total return of 37.7% and 38.0%, respectively. However, unlike the S&P 500 index which has already surpassed the record set in the end of 2021, IMCG has yet to reach the record set in late 2021. In fact, IMCG's current fund price of $67.73 per share is still lower than the historical high of $76.33 per share set on November 16, 2021. YCharts IMCG has outperformed other mid-cap growth funds If we compare IMCG to other mid-cap growth funds, we will find out that IMCG has done quite well in the past. Below is a chart that compares IMCG with two other mid-cap growth funds: iShares S&P Mid-Cap 400 Growth ETF (IJK) and iShares Russell Mid-Cap Growth ETF (IWP). As can be seen from the chart below, IMCG has delivered a total return of 191.1% in the past 10 years. This was better than IJK's 154.4% and IWP's 152.3%. YCharts Unfortunately, IMCG has underperformed its large-cap peer fund Despite IMCG's outperformance in the mid-cap growth space, this is not the case when we compare IMCG to other growth funds in the large-cap space. Let us compare IMCG to three other funds: iShares Morningstar Growth ETF (ILCG) which focuses on large-cap growth stocks; SPDR Portfolio S&P 500 Growth ETF (SPYG) which also focuses on large-cap growth stocks; iShares Morningstar Small-Cap Growth ETF (ISCG) which focuses on small-cap growth stocks. The comparison is exhibited in the chart below. As can be seen from the chart below illustrates, SPYG has the best performance among the four and delivered a total return of 288.7% in the past 10 years. This is followed by ILCG's 279.9%. IMCG only came in third, delivering a total return of only 191.1%, better than small-cap growth fund ISCG's performance of 124.8%. YCharts IMCG's lower exposure to technology stocks has likely caused its underperformance As the chart above suggests, large-cap growth funds typically outperform mid-cap growth funds and small-cap growth funds. The difference of IMCG's underperformance to ILCG and SPYG can be attributed to its lower exposure to technology stocks. As the chart below shows, IMCG's performance to information technology sector is about 20.9%. This is much lower than ILCG and SPYG's exposure of 47.0% and 50%, respectively. As we know, technology stocks have been riding on the wave of many technological megatrends such as mobile devices, Internet-of-things (IoTs), cloud computing, software-as-a-service, artificial intelligence, etc. Therefore, ILCG and SPYG have benefited greatly from their exposure to technology stocks in the past and outperformed IMCG. iShares Looking forward, we expect the trend to remain the same, that is, technology sector will continue to lead other sectors in terms of earnings growth. Below is a chart that shows the 2024/2025 EPS estimates for different sectors in the S&P 500 index. As can be seen, information technology sector is expected to lead all other sectors in each of 2024 and 2025. The exact figures may not be the same for mid-cap technology stocks, but it is reasonable to expect that mid-cap technology stocks will lead most other sectors in the mid-cap space as well. Hence, a high exposure to technology stocks will be critical for any growth funds that wish to outperform its peers. MacroMicro Rising trend of passive investing means the market will likely not favor mid-cap and small-cap stocks Another reason why investors should focus on large-cap growth funds is due to the rising popularity of passive investing. As we know, assets under passively managed funds has officially surpassed assets under actively managed funds in 2023, and this trend is likely to continue in the future. It is also important to know many passively managed funds aim to track certain indices such as the S&P 500 index, Nasdaq 100, or Dow Jones Industrial. These indices include basically only large-cap stocks. This means, large-cap stocks will continue to be favored by investors who opt for passive investing and these large-cap stocks will likely enjoy higher valuation multiples than mid-cap and small-cap stocks. Hence, we believe the best way to take advantage of this rising trend of passive investing is to focus on large-cap funds instead of opting for mid-cap and small-cap funds. IMCG's expense ratio not expensive IMCG has an expense ratio of only 0.06%. This ratio is comparable to its small-cap growth peer ISCG's 0.06%. However, it is slightly above its large-cap growth peer ILCG's 0.04%. When compared with its mid-cap growth peers, IMCG's expense ratio is much lower than IJK's 0.17% and IWP's 0.23%. Therefore, we do not think IMCG's expense ratio as expensive. Investor Takeaway  IMCG may have better performance than other mid-cap growth funds, but it has underperformed its large-cap growth peers such as ILCG and SPYG due to its lower exposure to technology stocks. Together with the rising trend of passive investing, which will likely favor large-cap stocks, large-cap growth funds will likely continue to outperform IMCG. Hence, investors aiming for higher total returns in the long run may wish to seek other large-cap growth funds instead.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"CCBot/2.0 (https://commoncrawl.org/faq/)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.30.2","shortVersion":"4.30.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2441983706"}