IWP targets the sweet spot of US equities — companies big enough to have proven business models but small enough to still grow rapidly. These $2-30 billion market cap firms often dominate niche markets and can compound earnings at 15-25% annually when firing on all cylinders.
How It Works
The fund tracks the Russell Midcap Growth Index, which screens the 800 smallest stocks in the Russell 1000 for growth characteristics: high price-to-book ratios, elevated earnings growth forecasts, and strong historical sales expansion. It market-cap weights these roughly 300-400 names and reconstitutes annually in June, creating significant turnover as companies graduate to large-cap or fall to small-cap territory.
Key Features
- Captures tomorrow's mega-caps today — past holdings include Netflix at $2B and Chipotle at $5B
- More concentrated than large-cap growth with top 10 holdings often 20-25% of assets
- Lower correlation to S&P 500 than large-cap growth funds during market rotations
Risks
- Growth stocks can crater 40-60% when earnings disappoint — see Peloton's 95% drawdown from this index
- Massive style rotations can underperform value by 20-30% in months like November 2020
- Higher volatility than large-caps with 20-25% annualized vol vs 15-18% for S&P 500
Who Should Own This
Perfect for investors with 10+ year horizons who want more octane than large-cap growth but less career risk than small-caps. Works best as a 10-20% satellite position around a core equity allocation, particularly for those under 50 who can stomach the volatility in exchange for capturing the next generation of market leaders before institutions pile in.