Mid-Cap ETFs Hit By Departures

Mid-cap exchange-traded funds have been among this year's best-performing broad market ETFs. Broadly speaking, mid-cap ETFs have also been prolific asset gatherers, but that trend is changing as 2016 draws to a close.


The WisdomTree MidCap Dividend Fund (ETF) DON and the SPDR S&P MidCap 400 ETF MDY are up an average of 21.6 percent year-to-date, underscoring the strength of mid-cap stocks. As its name implies, MDY follows the S&P MidCap 400. DON tracks the WisdomTree MidCap Dividend Index, which weights its holdings based on cash dividend projections for the coming year.

DON and MDY are two of the most popular mid-cap ETFs, but other funds in this category also hold billions in assets and it is some of those funds that are recently falling victim to outflows.


Investors have recently been departing the Vanguard Mid-Cap ETF VO and the iShares S&P MidCap 400 Value Index (ETF) IJJ. IJJ is up nearly 28 percent this year, while VO is higher by 12.7 percent.

“Specifically, we notice over $1.3 billion leaving VO (Vanguard Mid-Cap) and more than $1 billion flowing out of IJJ (iShares Mid-Cap 400 Value). The two funds respectively have about $16.6 billion and $5.6 billion in assets under management,” said Street One Financial Vice President Paul Weisbruch in a note out Wednesday.

Still, the recent outflows from big-name mid-cap ETFs like IJJ and VO do not put significant dents in the overall bullishness of 2016 mid-cap ETF flows.

Inflows And Outflows

“So these larger inflows are worth noting, even if they are simply tax-related portfolio tilts or performance/end-of-quarter linked trading. Even with the latest outflows, VO has still had a more than respectable year in 2016 in terms of attracting net assets, with more than $2.2 billion in while IJJ has still managed to attain a net positive $700 million in during this time frame,” added Weisbruch.

IJJ allocates over 21 percent of its weight to financial services stocks while industrial, technology and consumer discretionary names combine for over a third of the ETF's weight.

VO is a hit with investors in part to its low fee. With an annual expense ratio of just 0.08 percent, VO is less expensive than 93 percent of rival funds, according to Vanguard data.

Posted In: Mid-Cap ETFsPaul WeisbruchStreet One FinancialLong IdeasNewsBroad U.S. Equity ETFsMarketsTrading IdeasETFs