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Different Ways To Consider Mid-Cap Stocks

ETF Professor

As is the case with smaller stocks, mid-caps are lagging their large-cap counterparts this year. The S&P MidCap 400 Index, one of the most widely followed gauges of mid-cap equities, is higher by just over 4 percent year to date while the S&P 500 is up more than 11 percent.

However, data suggest some investors, probably of the institutional variety, are reassessing mid-cap exchange-traded funds, including those funds that isolate mid-cap growth and value stocks. In conjunction with a theme that is prominent with large-cap growth and value stocks and ETFs, mid-cap growth fare is outpacing the benchmark (S&P MidCap 400) while mid-cap value is lagging.

Year to date, the SPDR S&P 400 Mid Cap Growth ETF (NYSE: MDYG) is up almost 8 percent while the SPDR S&P 400 Mid Cap Value ETF (NYSE: MDV) is higher by less than 2 percent.

Suddenly Popular

Obviously, those performances confirm neither MDYG nor MDYV are setting the mid-cap space ablaze this year, but data also indicate investors have recently been warming to these ETFs.

“Both funds have seen large inflows lately relative to their asset bases, with $315 million and $340 million entering MDYG and MDYV respectively, and going back about a week, we see at least three trading sessions where volume in both funds was greatly elevated above the typical average trading volume — which is less than 100,000 shares for both funds,” said Street One Financial Vice President Paul Weisbruch in a note Wednesday. 

MDYV, the mid-cap value ETF, is now home to nearly $710 million in assets under management, while MDYG has almost $923 million in assets. Both ETFs are nearly 12 years old.

What's Inside

Some mid-cap ETFs stray outside the official definition of mid-cap with elevated market values, but MDYG's 243 components have a weighted average market capitalization of $5.6 billion. Like many growth ETFs, MDYG is heavy on technology and consumer discretionary names with those sectors combining for about 36 percent of the fund's roster.

MDYV holds 288 stocks with a weighted average market capitalization of $4.7 billion. Taking a page from many large-cap value funds, MDYV's largest sector allocation is financial services at over 20 percent. Technology and industrials combine for over a quarter MDYV's lineup.

Over the past three years, MDYG has outpaced the S&P MidCap 400 while MDYV has trailed the mid-cap benchmark.

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