ILCG: Growth Equities Fund, Getting Stretched

Summary

• 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.
• The fund follows a proprietary Morningstar index that represents a blend of Mid-Cap and Large-Cap Growth names.
• The portfolio holdings exhibit stretched valuation metrics, with average P/E ratios in the high 20s despite the substantial increase in risk-free rates.

imaginima/iStock via Getty Images

Thesis

The iShares Morningstar Growth ETF (NYSEARCA:ILCG) is an equities exchange traded fund. The vehicle focuses on large and mid-cap growth equities, and has had a parabolic performance in 2023, closely tracking the Nasdaq. It has been an unexpected

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.