Looking for broad exposure to the Mid Cap Value segment of the US equity market? You should consider the SPDR S&P 400 Mid Cap Value ETF (MDYV), a passively managed exchange traded fund launched on 11/08/2005.
The fund is sponsored by State Street Global Advisors. It has amassed assets over $2.32 billion, making it one of the larger ETFs attempting to match the Mid Cap Value segment of the US equity market.
Why Mid Cap Value
Compared to large and small cap companies, mid cap businesses tend to have higher growth prospects and are less volatile, respectively, with market capitalization between $2 billion and $10 billion. Thus, companies that fall under this category provide a stable and growth-heavy investment.
Value stocks have lower than average price-to-earnings and price-to-book ratios. They also have lower than average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.15%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.75%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Industrials sector--about 19.70% of the portfolio. Financials and Consumer Discretionary round out the top three.
Looking at individual holdings, Jabil Inc (JBL) accounts for about 1.26% of total assets, followed by Equity Lifestyle Properties (ELS) and Regal Rexnord Corp (RRX).
The top 10 holdings account for about 8.84% of total assets under management.
Performance and Risk
MDYV seeks to match the performance of the S&P MidCap 400 Value Index before fees and expenses. The S&P MidCap 400 Value Index measures the performance of the mid-capitalization value sector in the U.S. equity market.
The ETF return is roughly 8.79% so far this year and was up about 11.55% in the last one year (as of 09/04/2023). In the past 52-week period, it has traded between $57.82 and $74.60.
The ETF has a beta of 1.18 and standard deviation of 21.39% for the trailing three-year period, making it a medium risk choice in the space. With about 301 holdings, it effectively diversifies company-specific risk.
SPDR S&P 400 Mid Cap Value ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, MDYV is an excellent option for investors seeking exposure to the Style Box - Mid Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell Mid-Cap Value ETF (IWS) and the Vanguard Mid-Cap Value ETF (VOE) track a similar index. While iShares Russell Mid-Cap Value ETF has $12.95 billion in assets, Vanguard Mid-Cap Value ETF has $15.99 billion. IWS has an expense ratio of 0.23% and VOE charges 0.07%.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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