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Should SPDR S&P 400 Mid Cap Growth ETF (MDYG) Be on Your Investing Radar?

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), 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.

Costs

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) accounts for about 1.60% of total assets, followed by Cognex Corporation (CGNX) and Fair Isaac Corporation (FICO).

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.

Alternatives

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) and the iShares Russell MidCap Growth ETF (IWP) 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.


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SPDR S&P 400 Mid Cap Growth ETF (MDYG): ETF Research Reports
 
Cognex Corporation (CGNX): Free Stock Analysis Report
 
Fair Isaac Corporation (FICO): Free Stock Analysis Report
 
BioTechne Corp (TECH): Free Stock Analysis Report
 
iShares Russell MidCap Growth ETF (IWP): ETF Research Reports
 
Vanguard MidCap Growth ETF (VOT): ETF Research Reports
 
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