ETF Showdown: Mid-Cap Melee

In these trying times, it's hard to warm up to almost any equity-based ETF from the long side. Whether its a sector play or a market cap play, hardly anything is working. The other side of the coin is that these are the times to build a shopping list and the often unheralded mid-cap universe may prove to be an ideal place to start. That's the idea behind this week's “ETF Showdown,” which pits two interesting mid-cap ETFs against each other. Without further ado, let's see how the older and larger iShares Morningstar Mid Core Index Fund

hangs in against the new and cheaper Schwab U.S. Mid-Cap ETF

. For starters, the iShares Morningstar Mid Core Index Fund has some nice stats in its favor. The ETF, now just a few months past its seventh birthday, is home to 203 stocks and over $144 million in assets under management. Throw in a low expense ratio of 0.25% and you've got a diverse, affordable way of gaining mid-cap exposure. Those are nice numbers, but by comparison, the Schwab U.S. Mid-Cap ETF trumps its old colleague. SCHM made its debut in mid-January and has already accumulated nearly $80 million in AUM. In other words, the Schwab U.S. Mid-Cap ETF as attracted more than half the assets of the iShares Morningstar Mid Core Index Fund in just a fraction of the time. Not to mention, the Schwab U.S. Mid-Cap ETF holds nearly 500 stocks and sports an expense ratio of just 0.13%. That's paltry by the standards of any ETF and that's Schwab's bread and butter in terms of competing for assets with big issuers such as iShares. At the sector level, the iShares Morningstar Mid Core Index Fund is diverse. Industrials account for 19.5% of the ETF's weight. Consumer cylicals check in at over 15% while tech names chime in close to 13%. Real estate stocks represent over 12% of the ETF's weight and health care names are the last double-digit allocation at nearly 11%. That makes for an ETF sensitive to macroeconomic whims and the Schwab U.S. Mid-Cap ETF is no different. Financials account for 20% of SCHM's weight. Other double-digit sector allocations include industrials, consumer discretionary and information technology. Looking at those sector lineups it's easy to see why both funds are struggling in the current market environment, but in the essence of picking a winner, SCHM takes this showdown due to its lower fees and the fact that it's home to nearly 500 stocks.