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5 Mid-Cap ETFs Scaling New Highs

Sweta Killa
Sector ETF report for FDIS

Wall Street’s first quarter historic rally seems to be losing steam amid a bleak earnings picture and global growth concerns.

Unlike the recent quarters, projections for Q1 earnings have turned negative for the first time since the second quarter of 2016. S&P 500 earnings are expected to decline 4% from the same period last year despite 4.6% higher revenues and net margins are also likely to witness 100 basis points compression, per Earnings Trends (read: Beat Q1 Earnings Woes With These Sector ETFs & Stocks).

The IMF warned that global growth is slowing more than expected and thus reduced the growth outlook to 3.3% for this year, down 0.2 percentage points from the previous expectation. This is the third cut since October and marks the slowest expansion since 2016. Meanwhile, Trump threatened to slap tariffs on European goods worth $11 billion, escalating global trade war fears.

Further, with May being less than 20 days away, investors are expected to turn cautious as seasonality plays a huge role in pushing stocks down in the next six months, per the old adage “Sell in May and Go Away.” According to this investment saying, the stock market has a long history of weak performance during the summer months (May to October).

The combination of these factors will likely block the roads of the decade-old bulls. However, an improving economy, solid job market, strong consumer confidence and higher spending bode well for the stock market. Additionally, Fed’s dovish stance will add to its strength. Notably, the ultra-popular large-cap ETF SPY has gained 1.2% since the start of the second quarter while small-cap ETF IWM added 1.8%. Mid-cap ETF IJH outperformed, having gained 2% in the same timeframe.

While large companies are normally known for stability and the smaller ones for growth, mid-caps offer the best of both worlds. These middle-of-road securities have relatively less exposure to international markets compared to large caps, thereby making them good bets in the current market turmoil. Further, mid-cap stocks are less volatile than small caps. Thus, these stocks are currently a safer option and have higher upside potential (see: all the Mid Cap ETFs here).

As such, investors seeking to capitalize on the strong fundamentals but worried about uncertainty should consider mid-cap ETFs. Below, we have presented five ETFs that are scaling to new highs in the latest trading session.

Vanguard Mid-Cap Growth ETF VOT

This fund follows the CRSP US Mid Cap Growth Index, holding 169 securities with none accounting for more than 1.6% share. In terms of sector exposure, industrials occupies the top position at 25.9%, followed by technology (23.3%), financials (16.7%), and health care (12.7%). The product has managed nearly $6.1 billion in its asset base and trades in a good volume of around 196,000 shares a day on average. It charges 7 bps in annual fees and has risen 1.3% since the start of the second quarter. The fund has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.

iShares Russell Mid-Cap Growth ETF IWP

With AUM of $10.6 billion, this ETF tracks the Russell MidCap Growth Index. It holds 417 securities in its basket with none accounting for more than 1.4% of the total assets. It has key holdings in information technology, making up for 33.2% exposure while consumer discretionary, industrials and health care round off the next three spots. It charges 25 bps in annual fees and trades in average daily volume of 613,000 shares. The product has gained 2% so far this quarter and has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.

iShares Morningstar Mid-Cap Growth ETF JKH

With AUM of $468.8 million, this product tracks the Morningstar Mid Growth Index and holds 198 securities, with each accounting for less than 1.5% of assets. Information technology takes the largest share at 29.96% while health care, industrials and consumer discretionary also receive double-digit exposure each. The ETF charges 30 bps in annual fees and trades in volume of about 14,000 shares a day. It has added 1.5% in the same time period and has a Zacks ETF Rank #1 with a Medium risk outlook (read: Mid-Cap ETF Hits New 52-Week High).

Invesco Russell MidCap Pure Growth ETF PXMG

This fund tracks the Russell Midcap Pure Growth Index. It holds 95 securities in its portfolio, with none accounting for more than 3.12% of assets. From a sector perspective, information technology occupies the top position at 45.4%, while consumer discretionary (21.2%), healthcare (13.2%) and industrials (10.8%) round off the next three spots. The fund has AUM of $595.6 million and average daily volume of about 121,000 shares. It charges 39 bps in annual fees and has gained about 2.4% in the same time period. PXMG has a Zacks ETF Rank #1 with a Medium risk outlook (read: A Spread of Top-Ranked ETFs That Crushed the Market in Q1).

iShares Morningstar Mid-Cap ETF JKG">JKG

This ETF follows the Morningstar Mid Core Index, charging investors 25 bps in annual fees. It holds well-diversified 191 stocks, with none accounting for more than 1.62% of the assets. Industrials takes 20.6% of the portfolio in terms of sector allocation while Information technology, real estate, consumer discretionary, and financials round off the next four spots with a double-digit allocation each. The fund has amassed $714.4 million and trades in average daily volume of more than 11,000 shares. It has gained 1.8% since the start of the second quarter and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.

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Vanguard Mid-Cap Growth ETF (VOT): ETF Research Reports
 
iShares Russell 2000 ETF (IWM): ETF Research Reports
 
iShares Core S&P Mid-Cap ETF (IJH): ETF Research Reports
 
iShares Russell Mid-Cap Growth ETF (IWP): ETF Research Reports
 
SPDR S&P 500 ETF (SPY): ETF Research Reports
 
iShares Morningstar Mid-Cap Growth ETF (JKH): ETF Research Reports
 
Invesco Russell MidCap Pure Growth ETF (PXMG): ETF Research Reports
 
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