IJJ vs. IWN: Choosing the Best Mid-Cap Value ETF for 2026

Investors seeking exposure to U.S. mid-cap value stocks in 2026 face a critical decision: the iShares S&P Mid-Cap 400 Value ETF (IJJ) and the iShares Russell 2000 Value ETF (IWN) both offer compelling but distinct approaches. This analysis evaluates these two ETFs through three key lenses-cost efficiency, performance, and ESG alignment-to determine which better suits evolving market conditions and investor priorities.

Cost Efficiency: IJJ Emerges as the Clear Winner

Cost efficiency remains a cornerstone of long-term investment success. As of November 2025, IJJ carries an expense ratio of 0.18%, while IWN's expense ratio stands at 0.24% according to Morningstar. This 0.06% difference may seem minor, but over a decade, it translates to a significant drag on returns for IWN investors. For example, a $100,000 investment in IJJ would incur $180 in annual fees, whereas the same amount in IWN would cost $240 as reported by The Fool.

The disparity stems from their index structures: IJJ tracks the S&P MidCap 400 Value Index, which includes 295 mid-cap stocks, while IWN follows the Russell 2000 Value Index, encompassing over 1,400 small-cap companies as detailed in coverage. Broader indices typically require higher management costs, which explains IWN's elevated expense ratio. For cost-conscious investors, IJJ's lower fees make it the more attractive option.

Performance: IWN Outperformed IJJ in 2025, but Long-Term Trends Favor IJJ

Performance metrics reveal a nuanced picture. Over the past year (as of December 2025), IWN delivered a total return of 8.1%, outpacing IJJ's 3.8% according to The Fool. This outperformance aligns with IWN's focus on small-cap value stocks, which historically exhibit higher volatility and growth potential during market upswings. However, over a five-year period, IJJ demonstrated stronger cumulative returns: $1,000 invested in IJJ grew to $1,695, compared to IWN's $1,549 according to performance data.

The 3-year annualized return for IWN is reported at 9.59% per FinanceCharts, though another source cites 11.38%, highlighting potential variations in reporting methodologies as noted in coverage. Meanwhile, IJJ's 3-year annualized return is not explicitly stated but implied to lag behind IWN's.

Volatility also plays a role. IJJ's implied volatility (IV) of 23.38% and IV rank of 8.54% suggest relatively stable price movements compared to IWN's broader, more volatile exposure to small-cap stocks according to OptionCharts. Investors prioritizing short-term gains may lean toward IWN, while those seeking steadier long-term growth might favor IJJ.

ESG Alignment: IJJ Offers a Moderate Edge

Environmental, social, and governance (ESG) considerations are increasingly critical for modern investors. As of 2025, IJJ holds an ESG score of 6.22, placing it in the 67th percentile among its peers and the 41st percentile globally according to ETF Database. This score reflects moderate ESG alignment, with IJJ excluding approximately 4.49% of revenue exposure to socially irresponsible activities as reported. Its weighted average carbon intensity of 131.97 tons of CO2e per $M in sales also indicates room for improvement in environmental metrics according to ESG data.

In contrast, IWN lacks explicit ESG alignment. According to BlackRock, IWN does not pursue a sustainable, impact, or ESG investment strategy as stated. While a related ETF (IWS) has an ESG score of 6.68 according to ETF Database, IWN's ESG score is reported at 5.07, placing it in the 25th global percentile as detailed. This lower score, coupled with no stated exclusion criteria for socially irresponsible revenue, makes IWN less appealing for ESG-conscious investors.

Conclusion: Balancing Cost, Performance, and ESG

The choice between IJJ and IWN hinges on investor priorities:
- Cost Efficiency: IJJ's 0.18% expense ratio makes it the clear winner for minimizing fees.
- Performance: IWN's recent outperformance (8.1% vs. IJJ's 3.8%) favors it for short-term gains, but IJJ's five-year track record suggests more consistent long-term growth.
- ESG Alignment: IJJ's moderate ESG score and exclusion criteria give it an edge for socially responsible investors.

For 2026, investors prioritizing cost efficiency and ESG alignment should lean toward IJJ. However, those seeking short-term growth in a volatile market may find IWN's broader small-cap exposure more appealing. Ultimately, diversifying across both ETFs could offer a balanced approach, leveraging IJJ's stability and IWN's growth potential while mitigating risks.