iShares Russell 1000 Value Index (ETF) (AMEX:IWD)

NetscribeETF (37.64) Submitted: 3/12/2007 5:36:37 AM : Start Price: $73.79 IWD Score: -10.90

iShares Russell 1000 Value Index Fund (IWD) tracks stocks that correspond generally to the price and yield performance before fees and expenses. Being a sub set of Russell 1000 index it accounts for about 51% of the total market capitalization of the same representing the large U.S equities. The selection methodology is base on just two metrics of price to book ratio and the analyst average forecast for long-term earnings growth.
Financial services account for more than a third of the corpus with representation from banking, thrift and mortgage, asset management, investment banking and brokerage houses. With no signs of interest rate hikes, alternative investments gaining importance and busy merger and acquisition schedule ahead make the sector a bright spot. Wireless and Telecommunication of Utilities sector form the next big segment with 13% of the fund compositions represented by the industry biggies like Verizon, AT and T and Comcast. Migration to third generation handsets with web-based video capability and the trends of subsidizing handsets instead of cutting prices make it a bright spot. Outlook for the consumer discretionary sector dominated by entertainment and media looks neutral with challenges faced by entertainment content providers with digital market prone to piracy issues.
Expectation of oil prices to remain relatively high and volatile along with global tensions represents strong global demand. Uncertainties surrounding over the spare oil production by OPEC with positive signs of planned reduction comes as good news to 11% exposure of the fund to integrated oil sector. Proved reserves, rising hydrocarbon production, benefits from big pocket upstream growth opportunities in deepwater liquefied natural gas and ventures with state owned oil companies justify the 6.15% holding in Exxon Mobil corp. The defensive nature of the consumer staple in a slowing economy along with low volatility makes it very attractive.
Past performance of the fund has been good with average annualized return for the past three years standing at a phenomenal 14.90%. Moreover it had returned 22.01% for the year ending December 2006 with net assets of $9.3 billion and expense ratio of 0.20%. Though its expense ratio does not fare well with its peer, its fundamentals would help the stock zoom ahead for another positive year.