Additionally, when comparing mid-cap index funds and ETFs to actively managed products, the passive vehicles have outperformed by an average percentage point or more due to cost advantages, according to Morningstar. The average expense ratio on actively managed mutual funds is about 1.3%.
MarketWatch’s Jonathan Burton points out three low-cost mid-cap ETFs with robust returns.
- iShares Core S&P Mid-Cap ETF (NYSEArca: IJH). The S&P Mid-Cap ETF mirrors the S&P 400 MidCap Index. IJH has a 0.15% expense ratio. The fund is up 20% year-to-date and experienced an average annualized return of 10.1% over the past 5 years.
- Vanguard Mid-Cap ETF (NYSEArca: VO). This fund tracks the CRSP US Mid Cap Index. The index has a median market cap above $9 billion, compared to the $3.3 billion for the S&P MidCap 400. The ETF is up 20.5% year-to-date and gained 9.6% annually over the past 5 years. VO has a 0.16% expense ratio.
- iShares Russell Mid-Cap ETF (NYSEArca: IWR). The fund follows theRussell MidCap Index, which has a median market-cap of $5.3 billion, and holds 810 component stocks. IWR has a 0.22% expense ratio.
For more information on middle-capitalization stocks, visit our mid-cap category.
Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own VO.