If you're interested in broad exposure to the Mid Cap Growth segment of the US equity market, look no further than the SPDR S&P 400 Mid Cap Growth ETF (
MDYG Quick Quote MDYG - Free Report) , 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 $2.10 billion, making it one of the larger ETFs attempting to match the Mid Cap Growth segment of the US equity market.
Why Mid Cap Growth
With market capitalization between $2 billion and $10 billion, mid cap companies usually contain higher growth prospects than large cap companies, and are considered less risky than their small cap counterparts. These types of companies, then, have a good balance of stability and growth potential.
While growth stocks do boast higher than average sales and earnings growth rates, and they are expected to grow faster than the wider market, investors should note these kinds of stocks have higher valuations. Also, growth stocks are a type of equity that carries more risk compared to others. When you consider growth versus value, growth stocks are usually the clear winner in strong bull markets but tend to fall flat in nearly all other environments.
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.15%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 0.90%.
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 Information Technology sector--about 19.60% of the portfolio. Industrials and Healthcare round out the top three.
Looking at individual holdings, Bio-Techne Corporation (
TECH Quick Quote TECH - Free Report) accounts for about 1.60% of total assets, followed by Cognex Corporation ( CGNX Quick Quote CGNX - Free Report) and Fair Isaac Corporation ( FICO Quick Quote FICO - Free Report) .
The top 10 holdings account for about 12.49% of total assets under management.
Performance and Risk
MDYG seeks to match the performance of the S&P MidCap 400 Growth Index before fees and expenses. This Index measures the performance of the mid-capitalization growth sector in the U.S. equity market. The Index consists of those stocks in the S&P MidCap 400 Index exhibiting the strongest growth characteristics based on: sales growth; earnings change to price and momentum.
The ETF return is roughly 23.06% so far this year and it's up approximately 34.27% in the last one year (as of 11/08/2021). In the past 52-week period, it has traded between $62.90 and $83.54.
The ETF has a beta of 1.09 and standard deviation of 25.87% for the trailing three-year period, making it a medium risk choice in the space. With about 232 holdings, it effectively diversifies company-specific risk.
SPDR S&P 400 Mid Cap Growth ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, MDYG is an outstanding option for investors seeking exposure to the Style Box - Mid Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Vanguard MidCap Growth ETF (
VOT Quick Quote VOT - Free Report) and the iShares Russell MidCap Growth ETF ( IWP Quick Quote IWP - Free Report) track a similar index. While Vanguard MidCap Growth ETF has $12.50 billion in assets, iShares Russell MidCap Growth ETF has $16.97 billion. VOT has an expense ratio of 0.07% and IWP charges 0.23%. Bottom-Line
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also 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.