How to Best Make Use of Mid-Cap ETFs

Related: A Smart Beta Mid-Cap ETF Opportunity

MDY, which tracks the S&P MidCap 400 Index, allocates nearly a third of its combined weight to technology and financial services stocks. The industrial and consumer discretionary sectors combine for almost 28.60% of the fund’s weight. Data suggest that by historical standards, the mid-cap P/E ration premium to large caps is currently low.

“Based on data since 1995, the median premium from a P/E perspective for mid-cap stocks relative to large-cap stocks is 13%,” said SSgA. “In other words, the P/E ratio of mid-cap companies is typically 13% higher than those of large caps. However, today that premium is just 7%, indicating they are trading cheaper than they have relative to large-caps over the last 22 years.”

For more information on mid-caps, visit our mid-cap category.