Furthermore, MDY has a better track record compared to VO over the past 5 years, possibly due to lighter exposure to the energy sector, reports Todd Rosenbluth, S&P Capital IQ analyst from a recent note.
VO focuses a large allocation to the consumer discretionary sector, a good, defensive play during times of market uncertainty. Plus, VO’s expense ratio of 0.1%is tempting and hard to beat. MDY has an expense ratio of 0.25%. [Morningstar’s Aggressive ETF Portfolio for Retirees]
The comparison draws attention to the importance of looking into an ETF, and the holdings. This way, an investor knows exactly what type of sector exposure they are gaining and can allocate their portfolios accordingly.
Tisha Guerrero contributed to this article.