Highlighting the out-performance delivered by mid-caps this year, the SPDR S&P MidCap 400 ETF (NYSEArca: MDY) is up nearly 3% year-to-date while the S&P 500 is saddled with a small loss.
Mid-caps are less vulnerable to the strong dollar and companies with market values in the $2 billion to $10 billion range are often prime acquisition targets for their larger peers. With those catalysts and others buoying mid-caps, a new exchange traded fund could prove to be a well-timed idea, particularly with its dividend backstop.
The rotation into mid-caps is fueled by perceived currency risks that large-caps are exposed to – large multi-national U.S. corporations may see revenue streams diminish as overseas currencies continue to depreciate against the U.S. dollar.
In its ongoing expansion of its non-leveraged lineup, Direxion introduced the Direxion Value Line Small- and Mid-Cap High Dividend ETF (NYSEArca: VLSM) last week, bringing some new competition to the thinly populated arena of mid-cap dividend ETFs. [Direxion Expands Non-Leveraged Lineup With Dividend ETFs]
VLSM emphasizes above-average dividend payers that sport favorable risk profiles. The new ETF is benchmarked to the Value Line Small- and Mid-Cap High Dividend Yield TR Index (VLSMT). Although the index and the ETF include small-caps, mid-caps are the dominant theme as those stocks account for over 84% of VLSM’s underlying index.