“While traders continue to prefer MDY due to its heavy volume and deep options market, a lower expense ratio and structural advantages make IJH a better option for long-term investors in our view,” Rawson said. “Asset growth in this fund has improved liquidity to the point were trading costs between the two funds are comparably low.”
Lastly, Vanguard S&P Mid-Cap 400 ETF (NYSEArca: IVOO) is another option available. However, IVOO is the smallest of the bunch, with $352.1 million in assets and average volume of about 18,000 shares. The ETF has a 0.15% expense ratio.
Investors who are interested in filling out their portfolio with a mid-cap stock should be aware that middle-capitalization stocks are typically more volatile than their large-cap counterparts since the companies are less likely to hold competitive advantages to their peers, so the assets may be more sensitive business cycles. Moreover, U.S. mid-caps remain heavily correlated to large-caps and have historically only provided a minor diversification benefit to larger stocks.
For more information on middle capitalization-weighted stocks, visit our mid-cap category.
Max Chen contributed to this article.