Investor’s Business Daily reports that in comparing 25 mid-cap ETFs, a case can be made for leveraged funds and fundamental indexing. ProShares mid-cap ETFs came out ahead of other providers including iShares, SPDRs, PowerShares, Vanguard and WisdomTree. Some of the results are:
- ProShares Ultra Mid-Cap 400 (MVV) is up 25% for the year. Before jumping into the ProShares game, beware that leverage funds can amplify losses.
- Second place is the fundamentally weighted PowerShares Dynamic Mid-Cap Growth (PWJ), which is up 19% for the year.
- iShares Russell 2000 (IWM) is up 9%, which is market-cap weighted.
- The fundamentally weighted WisdomTree Mid-Cap Dividend Fund (DON) came in last. It is up 6% for the year.
Looking at these mid-cap ETFs, there is no clear answer as to whether fundamental indexing is better than market-cap indexing. Fundamental indexes don’t have a long track record, so more time is needed to give them a fair evaluation. Obviously the leveraged ETF outperformed the others, but if the index it tracks had been down, it would have been the worst performer. No matter what index type you choose, it’s important to have an exit strategy.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.