Sticking with yesterday’s theme of recapping how various index methodologies performed in the U.S. large cap core equity space in 2011, today we examine exchange traded funds that focus on mid cap stocks.
A dividend weighted approach, DON (WisdomTree Mid Cap Dividend) , fared very well last year, delivering a 2.70% return, while the market cap benchmarks IJH (iShares S&P MidCap 400), IVOO (Vanguard S&P MidCap 400) and MDY (SPDR S&P MidCap 400) lost 3.39%, 2.96% and 3.12%, respectively.
IWR (iShares Russell Mid Cap), another market cap weighted product (which as a refresher is calculated using an equity’s price times shares outstanding), lost 3.27% last year and VO (Vanguard Mid Cap) fell 3.37% while SCHM (Schwab U.S. Mid Cap) was down 4.05%.
The revenue weighted approach in mid-caps, RWK (RevenueShares Mid Cap), did not fare any better than the market cap weighted products, as the fund lost 4.57% in 2011 while another fundamentally weighted product, PXMC (PowerShares Fundamental Pure Mid Core), also lagged, down 4.71%.
The verdict is not out on equal weighting yet in the mid cap space, as EWMD (Rydex S&P Midcap 400 Equal Weight) launched in August of last year, so live performance history is limited. Aside from DON, the only other fund in the midcap space to post a gain in 2011 was FNX (First Trust Mid Cap Core AlphaDEX), which is a fundamentally screened/quantitative approach and gained 0.34% last year.
Alternative indexing methods are not guaranteed to outperform every year, and there are certain market environments where one or more might work better than another in the context of the market cap index benchmarks that managers are generally familiar with as their “bogeys” to meet. This said, dividend based approaches out-performed in 2011 against peers, and we will examine the U.S. small cap core equity space tomorrow.
WisdomTree Mid Cap Dividend
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