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Should SPDR S&P 400 Mid Cap Value ETF (MDYV) Be on Your Investing Radar?

·4 min read

Designed to provide broad exposure to the Mid Cap Value segment of the US equity market, the SPDR S&P 400 Mid Cap Value ETF (MDYV) is a passively managed exchange traded fund launched on 11/08/2005.

The fund is sponsored by State Street Global Advisors. It has amassed assets over $1.36 billion, making it one of the larger ETFs attempting to match the Mid Cap Value segment of the US equity market.

Why Mid Cap Value

Mid cap companies have market capitalization between $2 billion and $10 billion. They usually have higher growth prospects than large cap companies and are less volatile than small cap companies. Thus, companies that fall under this category provide a stable and growth-heavy investment.

Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.15%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 2.03%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Industrials sector--about 18.70% of the portfolio. Financials and Consumer Discretionary round out the top three.

Looking at individual holdings, First Horizon Corporation (FHN) accounts for about 1.09% of total assets, followed by Medical Properties Trust Inc. (MPW) and Reliance Steel & Aluminum Co. (RS).

The top 10 holdings account for about 8.81% of total assets under management.

Performance and Risk

MDYV seeks to match the performance of the S&P MidCap 400 Value Index before fees and expenses. The S&P MidCap 400 Value Index measures the performance of the mid-capitalization value sector in the U.S. equity market.

The ETF has lost about -15.74% so far this year and is down about -9.56% in the last one year (as of 06/23/2022). In the past 52-week period, it has traded between $58.95 and $72.84.

The ETF has a beta of 1.18 and standard deviation of 30.43% for the trailing three-year period, making it a medium risk choice in the space. With about 298 holdings, it effectively diversifies company-specific risk.

Alternatives

SPDR S&P 400 Mid Cap Value ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, MDYV is an outstanding option for investors seeking exposure to the Style Box - Mid Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.

The iShares Russell MidCap Value ETF (IWS) and the Vanguard MidCap Value ETF (VOE) track a similar index. While iShares Russell MidCap Value ETF has $12.36 billion in assets, Vanguard MidCap Value ETF has $14.70 billion. IWS has an expense ratio of 0.23% and VOE charges 0.07%.

Bottom-Line

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.


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