If you're interested in broad exposure to the Mid Cap Value segment of the US equity market, look no further than 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 $2.03 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. These types of companies, then, have a good balance of stability and growth potential.
Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. While value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value stocks in strong bull markets.
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
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 1.85%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector--about 19.30% of the portfolio. Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Jabil Inc (JBL) accounts for about 1.74% of total assets, followed by Equity Lifestyle Properties (ELS) and Chesapeake Energy Corp (CHK).
The top 10 holdings account for about 9.75% 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 0.67% so far this year and is up about 4.01% in the last one year (as of 11/06/2023). In the past 52-week period, it has traded between $59.86 and $74.60.
The ETF has a beta of 1.19 and standard deviation of 21.12% for the trailing three-year period, making it a medium risk choice in the space. With about 296 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 outstanding 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 $11.58 billion in assets, Vanguard Mid-Cap Value ETF has $14.84 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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