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3 Mid Cap ETFs Beating the Market Over One Month

Sweta Killa

Despite global concerns over political and financial stability, the U.S. stock market continues to climb on accelerating economic growth, recovering housing fundamentals, strengthening job market and increasing consumer confidence. In addition, strong corporate earnings and increased M&A activities support the rally.

Amid this rally, the often overlooked mid cap securities turned out as winners in recent weeks and are slowly approaching their all-time highs. While large companies are normally known for stability and smaller ones for growth, mid caps are arguably safer options allowing both growth and stability in portfolios simultaneously (read: Mid Cap ETFs Leading the Broad Rally).
 
These middle-of-road securities have the potential to move higher in turbulent times when compared to large and small caps. All these striking features of mid-caps have caught investors’ attention of late. This is especially true as the stock market ascent is still facing some threats from the ongoing turmoil in the Middle East, instability in Ukraine and Russia, uncertain growth in Europe, possibility of U.S. interest rate hike sooner-than-expected and weakening job creation in the last two months.

Given skepticism, investors may want to consider cycling into mid cap stocks at present, in order to obtain a nice momentum play as we head toward the rest of the year. While there are several ETFs available in this space, we have highlighted the three funds that are leading the mid cap space higher and are easily crushing the broad market by wide margins over the trailing one-month period.

Any of these could be worth a look and a less risky play given the rocky market. The three funds have a favorable Zacks ETF Rank of 3 or ‘Hold’ rating, suggesting room for more upside (see: all the Mid Cap ETFs here).

Guggenheim S&P MidCap 400 Pure Growth ETF (RFG)

This ETF provides targeted exposure to the growth segment of the U.S. mid-cap space by tracking the S&P MidCap 400 Pure Growth Index. The product has amassed $799.9 million in its asset base while sees light volume of less than 23,000 shares. The ETF charges 35 bps in annual fees from investors.

The fund holds 96 stocks, which are well spread across number of securities as each firm holds less than 3.5% of total assets. From a sector look, industrials and financials take the top two spots at 22.5% and 20.7%, respectively, while consumer discretionary, information technology and healthcare round of the top five. The ETF surged 5.3% over the past month.

Vanguard Mid-Cap Growth ETF (VOT)

This fund also targets growth segment of the U.S. mid cap equity market, by tracking the CRSP US Mid Cap Growth Index. Holding 184 securities in its basket, the fund is highly diversified across each component with none holding more than 1.4% share (read: 3 Impressive Mid Cap ETFs to Buy Now).

In terms of sector exposure, industrials occupy the top position at 21.2%, followed by consumer services (17.3%) and technology (16.5%). The product has managed over $2.3 billion in its asset base and trades in moderate volume of around 86,000 shares. Expense ratio came in at 0.09%. VOT returned 4.8% over the past one month.

PowerShares Fundamental Pure Mid Core Portfolio (PXMC)

This product offers broad exposure to the mid-cap segment of the broad U.S. stock market. It follows the RAFI Fundamental Mid Core Index, holding 155 securities in its basket. The ETF puts small allocation to individual securities that could keep the portfolio balanced among various companies, and prevent heavy concentration. None of the holdings account for more than 1.56% of assets.

However, the fund is skewed toward financial sector at 24.3%, followed by industrials and consumer discretionary with 15% share each. The product is unpopular and illiquid with AUM of $32.6 million and average daily volume of about 2,000 shares per day. It charges 39 bps in fees per year from investors and added 4.3% in the trailing one-month period (read: 3 Top Ranked Consumer ETFs to Ride On Solid Data).

Bottom Line

All these products are expected to continue their strong performances in the coming months given the bout of volatility. Further, investors’ desire toward investment in both growth and stable companies will take the mid cap space to new highs.  

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Read the analyst report on RFG

Read the analyst report on VOT

Read the analyst report on PXMC


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