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Mid-Cap ETFs Deserving Attention Amid Current Market Conditions
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Wall Street saw some respite in yesterday’s trading session from the rough phase since the beginning of 2022. All the three major averages traded in the green on Jan 11. The Dow Jones Industrial Average was up 0.5%. The S&P 500 and the Nasdaq Composite rose 0.9% and 1.4%, respectively, in yesterday’s trading session.
The rising benchmark 10-year Treasury yields have primarily caused volatility in the stock market. The yields rose as high as above 1.8% on Jan 10 after standing at 1.51% on Dec 31.
The Federal Reserve has already started tapering the bond purchases, which it expects to complete by March. The Fed is expected to begin raising its benchmark interest rate in March. The Federal Reserve may take a more aggressive approach in raising interest rates. In fact, Goldman Sachs is expecting the Federal Reserve to increase interest rates four times this year, according to a CNBC article.
Investors seeking to capitalize on the strong fundamentals but worried about uncertainty should consider mid-cap ETFs like Vanguard Mid-Cap ETF (VO - Free Report) , SPDR S&P MIDCAP 400 ETF Trust (MDY - Free Report) , iShares Russell Mid-Cap Value ETF (IWS - Free Report) , Vanguard Mid-Cap Growth ETF (VOT - Free Report) and Schwab U.S. Mid-Cap ETF (SCHM - Free Report) .
The release of certain disappointing economic data releases is also raising concerns. For starters, the ISM Manufacturing PMI in the United States slid to 58.7 in December of 2021 from 61.1 in November, lagging market forecasts of 60. The reading highlighted the weakest growth in factory activity since January due to softness in new orders growth (60.4 vs. 61.5). Going on, the latest jobs report for December looks disappointing. The U.S. economy added 199,000 jobs in December 2021, lagging market estimates of 400,000. Non-farm employment increased by 18.8 million since April 2020 but is still down by 2.3% from its pre-pandemic level in February 2020.
Meanwhile, consumers have shown unexpected resilience to the concerns regarding rising Omicron cases and high inflation levels in December. They seem optimistic about improving employment conditions and the recovering U.S. economy from the pandemic-led slowdown. The Conference Board's measure of consumer confidence index stands at 115.8 in December, comparing favorably with an upwardly revised reading of 111.9 in November. December’s reading surpassed the consensus estimate of the metric, coming in at 111, per a Bloomberg poll.
Mid-Cap ETFs to Consider
Considering the mixed sentiments, mid-cap funds are gaining attention as they provide both growth and stability compared to their small-cap and large-cap counterparts. As such, investors seeking to capitalize on the strong fundamentals but worried about uncertainty should consider mid-cap ETFs. Below, we have presented five popular mid-cap ETFs:
Vanguard Mid-Cap ETF seeks to track the performance of the CRSP US Mid Cap Index, which measures the investment return of mid-capitalization stocks. VO has AUM of $55.75 billion. Vanguard Mid-Cap ETF charges a fee of 4 basis points (bps).
SPDR S&P MIDCAP 400 ETF Trust seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the S&P MidCap 400 Index. MDY has AUM of $21.70 billion. SPDR S&P MIDCAP 400 ETF Trust charges a fee of 23 bps (see: all the Mid Cap ETFs here).
iShares Russell Mid-Cap Value ETF provides exposure to mid-sized U.S. companies that are thought to be undervalued by the market relative to comparable companies and tracks the Russell MidCap Value Index. It has AUM of $15.21 billion. IWS charges a fee of 23 bps.
Vanguard Mid-Cap Growth ETF seeks to track the performance of the CRSP US Mid Cap Growth Index, which measures the investment return of mid-capitalization growth stocks. VOT has AUM of $11.80 billion. Vanguard Mid-Cap Growth ETF charges a fee of 7 bps.
Schwab U.S. Mid-Cap ETF’s goal is to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Mid-Cap Total Stock Market Index. SCHM has AUM of $10.09 billion and charges a fee of 4 bps.
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Mid-Cap ETFs Deserving Attention Amid Current Market Conditions
Wall Street saw some respite in yesterday’s trading session from the rough phase since the beginning of 2022. All the three major averages traded in the green on Jan 11. The Dow Jones Industrial Average was up 0.5%. The S&P 500 and the Nasdaq Composite rose 0.9% and 1.4%, respectively, in yesterday’s trading session.
The rising benchmark 10-year Treasury yields have primarily caused volatility in the stock market. The yields rose as high as above 1.8% on Jan 10 after standing at 1.51% on Dec 31.
The Federal Reserve has already started tapering the bond purchases, which it expects to complete by March. The Fed is expected to begin raising its benchmark interest rate in March. The Federal Reserve may take a more aggressive approach in raising interest rates. In fact, Goldman Sachs is expecting the Federal Reserve to increase interest rates four times this year, according to a CNBC article.
Investors seeking to capitalize on the strong fundamentals but worried about uncertainty should consider mid-cap ETFs like Vanguard Mid-Cap ETF (VO - Free Report) , SPDR S&P MIDCAP 400 ETF Trust (MDY - Free Report) , iShares Russell Mid-Cap Value ETF (IWS - Free Report) , Vanguard Mid-Cap Growth ETF (VOT - Free Report) and Schwab U.S. Mid-Cap ETF (SCHM - Free Report) .
The release of certain disappointing economic data releases is also raising concerns. For starters, the ISM Manufacturing PMI in the United States slid to 58.7 in December of 2021 from 61.1 in November, lagging market forecasts of 60. The reading highlighted the weakest growth in factory activity since January due to softness in new orders growth (60.4 vs. 61.5). Going on, the latest jobs report for December looks disappointing. The U.S. economy added 199,000 jobs in December 2021, lagging market estimates of 400,000. Non-farm employment increased by 18.8 million since April 2020 but is still down by 2.3% from its pre-pandemic level in February 2020.
Meanwhile, consumers have shown unexpected resilience to the concerns regarding rising Omicron cases and high inflation levels in December. They seem optimistic about improving employment conditions and the recovering U.S. economy from the pandemic-led slowdown. The Conference Board's measure of consumer confidence index stands at 115.8 in December, comparing favorably with an upwardly revised reading of 111.9 in November. December’s reading surpassed the consensus estimate of the metric, coming in at 111, per a Bloomberg poll.
Mid-Cap ETFs to Consider
Considering the mixed sentiments, mid-cap funds are gaining attention as they provide both growth and stability compared to their small-cap and large-cap counterparts. As such, investors seeking to capitalize on the strong fundamentals but worried about uncertainty should consider mid-cap ETFs. Below, we have presented five popular mid-cap ETFs:
Vanguard Mid-Cap ETF (VO - Free Report)
Vanguard Mid-Cap ETF seeks to track the performance of the CRSP US Mid Cap Index, which measures the investment return of mid-capitalization stocks. VO has AUM of $55.75 billion. Vanguard Mid-Cap ETF charges a fee of 4 basis points (bps).
SPDR S&P MIDCAP 400 ETF Trust (MDY - Free Report)
SPDR S&P MIDCAP 400 ETF Trust seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the S&P MidCap 400 Index. MDY has AUM of $21.70 billion. SPDR S&P MIDCAP 400 ETF Trust charges a fee of 23 bps (see: all the Mid Cap ETFs here).
iShares Russell Mid-Cap Value ETF (IWS - Free Report)
iShares Russell Mid-Cap Value ETF provides exposure to mid-sized U.S. companies that are thought to be undervalued by the market relative to comparable companies and tracks the Russell MidCap Value Index. It has AUM of $15.21 billion. IWS charges a fee of 23 bps.
Vanguard Mid-Cap Growth ETF (VOT - Free Report)
Vanguard Mid-Cap Growth ETF seeks to track the performance of the CRSP US Mid Cap Growth Index, which measures the investment return of mid-capitalization growth stocks. VOT has AUM of $11.80 billion. Vanguard Mid-Cap Growth ETF charges a fee of 7 bps.
Schwab U.S. Mid-Cap ETF (SCHM - Free Report)
Schwab U.S. Mid-Cap ETF’s goal is to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Mid-Cap Total Stock Market Index. SCHM has AUM of $10.09 billion and charges a fee of 4 bps.