A sound investment process and strong management team underpin iShares Morningstar Growth ETF's Morningstar Medalist Rating of Gold. The portfolio maintains a sizable cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The strategy's investment process inspires confidence and earns an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an underweight position in yield exposure and an overweight in liquidity exposure compared with category peers. Low yield exposure is attributed to holding fewer stocks with high dividend or buyback yields -- instead, typically holding companies with a stronger focus on growth opposed to returning capital. And a high liquidity exposure is rooted in stocks with higher trading volumes, lending managers more flexibility. The strategy’s management team earns an Above Average People Pillar rating. The strategy's parent organization earns the firm an Above Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

Microsoft

Apple

NVIDIA

Amazon

Eli Lilly

Alphabet

Visa

Tesla

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. iShares Morningstar Growth ETF earns an Above Average Process Pillar rating. 

The largest contributor to the rating is that this fund tracks an index. Historical data, like Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. The firm's five-year retention rate of 92% also strengthens the process. Lastly, the process is limited by the fund's weak long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the process has struggled over that period.

 This strategy tends to hold smaller, higher-growth companies than its average peer in the Large Growth Morningstar Category. Analyzing additional factors, this strategy has shown a tendency to hold fewer stocks with high dividend or buyback yields compared with Morningstar Category peers in recent years. This is demonstrated by the portfolio's low exposure to dividends or buybacks. While companies with high yields provide steady income payments, they may cut payouts if their earnings fall. In the latest month, the strategy was also less exposed to the Yield factor compared with Morningstar Category peers. This strategy has also exhibited a tilt towards more high-liquid assets over peers in recent years, evidenced by consistently holding companies with relatively higher trading volumes. This gives the managers more flexibility during bear markets to sell without adversely affecting prices. Compared with category peers, the strategy also had more exposure to the Liquidity factor in the most recent month. Furthermore, the strategy had more exposure to high-volatility stocks compared with Morningstar Category peers in recent months. This is a higher-risk, higher-reward approach.  More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section. 

 The portfolio is overweight in technology by 6.7 percentage points in terms of assets compared with the category average, and its real estate allocation is similar to the category. The sectors with low exposure compared to category peers are healthcare and communication services, with healthcare underweighting the average portfolio by 3.8 percentage points of assets and communication services similar to the average. The strategy owns 397 securities and is about as top-heavy as the category average, with 53.3% of assets in the top 10 holdings. And finally, in terms of portfolio turnover, looking at year-over-year movements, 28% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Above Average

Process

iShares Morningstar Growth ETF's strong equity team drives the strategy's Above Average People Pillar rating. There are three managers listed on the fund: Paul Whitehead, Jennifer Hsui, Greg Savage. Experience on the team is abundant, with 18 years of average portfolio management experience. Together, they manage a total of 257 strategies, with solid long-term prospects. The strategies average a Silver asset-weighted Morningstar Medalist Rating, indicating a position to deliver positive alpha relative to the category median in aggregate.  

 Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

People

BlackRock offers compelling options across asset classes and vehicles. It earns an Above Average rating for Parent. 
The firm’s approximately USD 8 trillion in assets under management, as of Sept. 30, 2022, gives it unparalleled scale and influence. It is a market-leading index fund provider globally, and its iShares exchange-traded fund franchise offers a low-cost lineup of core funds that investors can use to build a well-diversified portfolio for dirt cheap. The firm can be more adventurous in its ETF launches than some peers, so not everything it launches is appropriate for the masses. As a result, it is likely to have more ETF closures than peers that stick to the basic building blocks.  
The firm’s active fixed-income and multi-asset efforts also stand out as some of the best in the industry. Those benefit from BlackRock’s commitment to building a first-class risk management system via its Aladdin analytics software. The software is also available for sale to other firms and has proved to be a popular option for competitors, a testament to its usefulness. 
More recently, the firm has shifted its focus to ESG offerings and incorporating ESG across its investment lineup, leading to a political backlash in the United States.
BlackRock isn’t the best at everything it tries to do, but retail investors, financial advisors, and large institutions could all build robust portfolios using BlackRock’s products.

Parent

iShares Morningstar Growth ETF

ILCG tracks a market cap-weighted index of growth stocks, selected from the top 90% of the US market-cap spectrum.

ILCG is poised to disappoint in the current high interest rate environment, driven in part by its overweight to expensive high growth Tech stocks, and a potential resurgence of Value. Active managers are better equipped to navigate the current environment relative to passive funds like ILCG. Growth-oriented investors should consider QQQ as an alternative, which has consistently outperformed ILCG with similar exposure and volatility.

ILCG: More Growth? In This Economy?

For investors seeking momentum, iShares Morningstar Growth ETF ILCG is probably on the radar. The fund just hit a 52-week high and is up 43% from its 52-week low of $50.37 per share.

Large-Cap Growth ETF (ILCG) Hits New 52-Week High

iShares Morningstar Growth ETF tracks the Morningstar US Large-Mid Cap Broad Growth Index and offers targeted access to large-cap domestic growth stocks. ILCG holds significant holdings in prominent tech companies such as Apple, Microsoft, Amazon, Nvidia, and Tesla. The fund's portfolio is heavily skewed towards the Information Technology sector, with a low expense ratio of 0.04%, making it a cost-efficient option for growth stock exposure.

ILCG: Yet Another Growth Fund In A Tired Style

ILCG is a tech-skewed ETF thanks to being subsetted to above average growth and being value-weighted within that subset. The ETF has a high concentration in tech, with more than 40% of its exposure in the sector, as well as exposure to other high brand-equity and big name stocks. The average PE ratio of the ETF is 33x, indicating high valuations, and the PE has remained stable for the top holdings despite changes in the cost of capital narrative.

ILCG: Don't Chase Tech

The iShares Morningstar Growth ETF, which focuses on large and mid-cap growth equities, has seen a strong performance in 2023. The ETF's performance is largely driven by tech mega-caps, with its portfolio showing stretched valuation metrics; it is up 26% this year, representing a midpoint between QQQ's 37% performance and VOT's 13% gain.

ILCG: Growth Equities Fund, Getting Stretched

iShares Russell 1000 Growth ETF

iShares Russell Top 200 Growth ETF

Vanguard Mega Cap Growth ETF

Schwab U.S. Large-Cap Growth ETF

The blend of robust economic recovery, continued low-interest rates, AI frenzy and strong corporate earnings led to the outperformance in 1H and will likely continue to drive the second-half performance.

News for iShares Morningstar Growth ETF ETF (ILCG)