On size alone, it is impossible to say mid-cap exchange traded funds are overlooked. The iShares Core S&P Mid-Cap ETF (NYSEArca: IJH) and the SPDR Mid-Cap 400 (NYSEArca: MDY), home to $20.4 billion and $15.8 billion in assets under management, respectively, are two of the 21 largest U.S. ETFs.
What is often glossed over is the out-performance offered by mid-cap ETFs relative to some benchmark indices, such as the S&P 500.
“Over the past couple of years, the S&P 400 has continued to trend strongly to the upside. In fact, the S&P 400 has gained over 230% since its financial crisis lows and remains well within the confines of a steep upward sloping trend channel,” according to Chart of the Day.
Over the past two years, mid-cap ETFs have really flexed their muscles. The Vanguard Mid-Cap ETF (NYSEArca: VO) and the Schwab US Mid-Cap ETF (NYSEArca: SCHM) are each up about 40%, performances that are well ahead of the S&P 500 over the same time period. Neither index tracks the S&P 500 MidCap Index, but both are liquid, low-cost avenues for investors looking for mid-cap exposure. [Mid-Cap ETFs Find Sweet Spot]
SCHM, which debuted in January 2011, charges just 0.07% per year and is now a $1 billion ETF. VO charges 0.1% per year.
VO tries to reflect the performance of the CRSP US Mid Cap Index. CRSP’s weighting methodology differs from the S&P. Consequently, the average market for a stock in the underlying index is $9 billion, which is less than the $62 billion in the S&P 500 and a little more than the $4 billion for the S&P 400. [Mid-Cap ETFs Keep Soaring]
IJH has been the lead of the pack with a two-year run of 50%. IJH has four double-digit sector allocations – financial services, industrials, technology and consumer discretionary . That group combines for over 69% of the ETF’s sector weight. IJH has a beta of 1.03 against the S&P 500 and a three-year standard deviation of 15.35%, according to iShares data.
Chart Courtesy: Chart of the Day
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of VO.