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Looking for broad exposure to the Mid Cap Blend segment of the US equity market? You should consider the SPDR S&P MidCap 400 ETF (MDY), a passively managed exchange traded fund launched on 05/04/1995.
The fund is sponsored by State Street Global Advisors. It has amassed assets over $18.07 billion, making it one of the larger ETFs attempting to match the Mid Cap Blend segment of the US equity market.
Why Mid Cap Blend
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.
Typically holding a combination of both growth and value stocks, blend ETFs also demonstrate qualities seen in value and growth investments.
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.23%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.14%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Industrials sector--about 18.20% of the portfolio. Financials and Consumer Discretionary round out the top three.
Looking at individual holdings, Camden Property Trust (CPT) accounts for about 0.74% of total assets, followed by Targa Resources Corp. (TRGP) and Alcoa Corporation (AA).
The top 10 holdings account for about 6.1% of total assets under management.
Performance and Risk
MDY seeks to match the performance of the S&P MidCap 400 Index before fees and expenses. The S&P MidCap 400 Index is composed of 400 selected stocks listed on national stock exchanges, and spans a broad range of major industry groups.
The ETF has lost about -11.43% so far this year and is down about -6.58% in the last one year (as of 05/03/2022). In the past 52-week period, it has traded between $455.83 and $531.03.
The ETF has a beta of 1.12 and standard deviation of 28% for the trailing three-year period, making it a medium risk choice in the space. With about 401 holdings, it effectively diversifies company-specific risk.
SPDR S&P MidCap 400 ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, MDY is a good option for those seeking exposure to the Style Box - Mid Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.
The Vanguard MidCap ETF (VO) and the iShares Core S&P MidCap ETF (IJH) track a similar index. While Vanguard MidCap ETF has $50.49 billion in assets, iShares Core S&P MidCap ETF has $61.70 billion. VO has an expense ratio of 0.04% and IJH charges 0.05%.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they 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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SPDR S&P MidCap 400 ETF (MDY): ETF Research Reports
Alcoa (AA) : Free Stock Analysis Report
Camden Property Trust (CPT) : Free Stock Analysis Report
Targa Resources, Inc. (TRGP) : Free Stock Analysis Report
iShares Core S&P MidCap ETF (IJH): ETF Research Reports
Vanguard MidCap ETF (VO): ETF Research Reports
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