Consider ETFs For Mid-Cap Exposure, S&P Says (MDY, DON, VOE)
On a year-to-date basis, the SPDR S&P MidCap 400 ETF (NYSE: MDY) has slightly outperformed the SPDR S&P 500 (NYSE: SPY) and S&P Capital IQ says in a recent research note that mid-caps might have more upside while endorsing ETFs as a way for investors to get exposure to the mid-cap space.
The firm notes that Sam Stovall, Chief Equity Strategist for S&P Capital IQ,believes that history suggests, but does not guarantee, that these stocks (mid-caps), as a group, have more room to run. Of the 400 companies that comprise the S&P MidCap 400 Index, S&P Capital IQ covers 245 of them, but has Buy or Strong Buy ratings on just 45.
In the research note, S&P Capital IQ highlighted three ETFs, the WisdomTree MidCap Dividend ETF (NYSE: DON), the iShares Russell Midcap Value Index Fund (NYSE: IWS) and the Vanguard Mid-Cap Value ETF (NYSE: VOE). DON and IWS earned Marketweight ratings from S&P, but the Vanguard Mid-Cap Value ETF earned an Overweight rating because four of the ETF's top-10 holdings are rated Buy by S&P.
VOE is home to 262 stocks and $1.8 billion in assets under management. Financials account for 28.3% of the fund's weight. Consumer discretionary, technology, industrials and utilities names also receive double-digit allocations. With an expense ratio of 0.12%, VOE is cheaper than 91% of comparable funds, according to Vanguard's Web site.
The iShares Russell Midcap Value Index Fund is larger by assets ($3.1 billion) and holdings (527). Nearly a third of that ETF's weight is allocated to financials while utilities and consumer discretionary names combine for another 26%. Producer durable land an allocation of 10.15%.
The WisdomTree MidCap Dividend ETF has an expense ratio of 0.38%, making it the most expensive fund of the trio, but the fund has a 30-day SEC yield north of 3%. Financials figure more prominently into DON's sector mix with a weight of 38.5% while utilities, consumer discretionary and industrials also get double-digit allocations.
Year-to-date, VOE has outperformed the other ETFs highlighted in the S&P research note, but MDY has outperformed VOE, IWS and DON by a decent margin. MDY has an expense ratio of 0.25% and over $10.2 billion in AUM.
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