CHICAGO, July 14, 2014 /PRNewswire/ -- Today, Zacks Investment Ideas feature highlights Features: Vanguard Mid-Cap Value ETF(AMEX:VOE-Free Report), SPDR S&P MidCap 400 (AMEX:MDY-Free Report), SPDR SP 400 Mid Cap Value ETF(AMEX:MDYV-Free Report) and Vanguard SP Mid-Cap 400 ETF(AMEX:IVOO-Free Report).
3 Impressive Mid-Cap ETFs to Buy Now
If there is one part of the market that is always overlooked by investors, it is certainly mid-caps. This capitalization level is passed over by investors looking for growth, while it is also shunned by those seeking stability in their equity portfolios.
However, now might just be the perfect time to take a closer look at this market cap level, especially considering some of the trends in the market.
Small caps are currently facing weakness as a bit of a risk off trade enters the market, while many smaller hot stocks are going through another consolidation phase as well. Meanwhile, large caps, thanks to their heavier foreign exposure, could be hit by a stronger dollar, European worries, and emerging market uncertainty.
In this type of environment, mid-caps can straddle the line and offer a 'best of both worlds' scenario. Many mid-caps have a little bit of foreign exposure, but not an overpowering level, while they can still offer up growth potential as well.
How to Invest in Mid-Caps
Many investors don't really know where to begin for mid-caps, but ETFs offer up a variety of ways to tackle this overlooked part of the market. In fact, there are literally dozens of mid cap funds currently trading, giving exposure to various styles including 'broad', 'value', and 'growth' (see all the Mid Cap ETFs here).
With such a large number of choices though, it may be difficult to narrow down seemingly very similar funds. After all, many of these products target the same securities though they have different tilts, weighting schemes or focuses for their portfolios.
What's an Investor to do?
One way to narrow down the list is to utilize the Zacks ETF Rank. This system looks to help find the best ETFs in a given market segment based on a number of factors including market outlook, expenses, and tradability.
And given the rise of the outlook for mid-caps as of late, it shouldn't be too surprising that a few have moved from Zacks ETF Rank #3 (Hold) to Zacks ETF Rank #2 (Buy) in the latest ratings update. Below, we have highlighted these three surging funds in brief detail for investors seeking a way to make a great play on the overlooked mid cap space in basket form:
Vanguard Mid-Cap Value ETF (AMEX:VOE-Free Report)
This fund looks to track the CRSP US Mid Cap Value Index, using a passive management, full-replication approach. The product has just over 200 stocks in its basket, spreading out assets very well as just 11.2% of assets are in the top ten holdings (see all the Top Ranked ETFs here).
Financials are the top holdings in this ETF, accounting for 23.5% of assets, followed by consumer goods, and industrials at around 14% each. The fund is very light in telecoms, while it is sparse in basic materials and technology as well.
The dividend yield here is solid at roughly 1.8% in 30 Day SEC terms, while the cost is ultra-low at nine basis points a year. This fund has easily outperformed the most popular mid cap ETF, (AMEX:MDY-Free Report), while it has also beaten the S&P 500 YTD.
SPDR SP 400 Mid Cap Value ETF (AMEX:MDYV-Free Report)
This ETF tracks the total return performance of the S&P Mid Cap 400 Value Index, before fees and expenses. The fund holds just under 300 stocks in its portfolio, with a weighted average market capitalization of $4.76 billion (see Mid Cap ETF Investing 101).
Financials dominate this fund, accounting for roughly 27.8% of the portfolio, followed by technology and industrials at about 13% each. The product is light in energy, staples, and telecoms, as these combine to make up less than 10% of assets.
This fund has a decent dividend yield of about 1.4% in 30 Day SEC terms while it has an expense ratio of 25 basis points a year. The product has outperformed the popular MDY in the YTD time frame, while it has also edged out the S&P 500 as well.
Vanguard SP Mid-Cap 400 ETF (AMEX:IVOO-Free Report)
For those looking to go beyond value in the mid cap space, IVOO, a fund which tracks the S&P Mid Cap 400 Index, could be an interesting choice. This product holds roughly 400 stocks in its portfolio, while it spreads out assets extremely well across the top holdings (also read 3 Dirt Cheap Top Ranked ETFs to Buy Now).
In terms of sector exposure, again financials lead (23.1%), though industrials and technology both account for at least 15.6% as well. In terms of low sector allocations, telecoms again receive hardly any exposure, while staples and utilities also receive less than a 5% allocation too.
This fund has a 30 Day SEC yield of 1.2%, while its expense ratio is pretty cheap at 15 basis points a year. However, IVOO hasn't performed as well as its value counterparts this year, but its performance is in line with the other benchmarks of MDY and SPY. Still, with its more balanced approach, this could be a solid choice for investors seeking to go beyond value to close out 2014 in this overlooked market segment.
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Click here for your free subscription to Profit from the Pros.
Get the full Report on VOE – FREE
Get the full Report on MDY – FREE
Get the full Report on MDYV – FREE
Get the full Report on IVOO – FREE
Follow us on Twitter: http://twitter.com/ZacksResearch
Join us on Facebook: http://www.facebook.com/ZacksInvestmentResearch
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
[email protected]
http://www.zacks.com
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Logo - http://photos.prnewswire.com/prnh/20101027/ZIRLOGO
SOURCE Zacks Investment Research, Inc.
Share this article