Back to top

Image: Shutterstock

Here's Why Mid-Cap ETFs Can be Good Bets Amid the War Crisis

Read MoreHide Full Article

Investors continue to feel the pinch of the Russia-Ukraine war crisis and red-hot inflation levels. The war has been intensifying even after the attempts to conduct negotiation talks. Also, the United States and its allies are imposing economic sanctions on Russia to isolate Moscow.

In what can be a major blow to Kremlin’s economy, the United States and its allies are discussing imposing a ban on oil and gas imports from Russia. Meanwhile, the war can make the already high inflation levels worse in the United States as the crisis continues driving commodity prices. Oil prices have already been rallying amid geopolitical tensions.

Russia’s move is leading to a rise in oil prices as it is among the world’s largest suppliers of oil and natural gas. Russia stands as the world’s second-largest oil producer. European refineries procure most of their crude oil supplies from Russia. Notably, Russia provides about two-fifths of its natural gas supply to Europe. In fact, Russia emerged as the largest natural gas and oil supplier to the European Union in 2021.

Market analysts are also worried that the global economies might see a crunch in the supplies of industrial metals if the war lasts long because Russia and Ukraine stand out as major producers.

Meanwhile, the U.S. economic fundamentals have been staying strong. Despite disappointing U.S. consumer sentiment levels, consumer spending has remained robust. In fact, a recent report highlighted that inflation-adjusted expenditure surged the maximum in January in 10 months (per a BloombergQuint article). Moreover, the labor market continues to improve. According to the Bureau of Labor Statistics, the U.S. economy added 678,000 jobs in February, beating economists’ expectations of 440,000 (per Dow Jones). The unemployment rate also dropped to 3.8%.

Going on, the Institute of Supply Management (ISM) has reported that its manufacturing index for February rose to 58.6% from 57.7% in January, surpassing the consensus estimate of 57.7%. This marked the 21st successive month of growth for the U.S. manufacturing industry.

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 $52.98 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 $19.87 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 $14.75 billion. IWS charges a fee of 23 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 $9.75 billion and charges a fee of 4 bps.

Published in