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Top 10 U.S. Small-Cap, Mid-Cap ETFs

Our goal in this profile is to help investors wade through the many competing ETF offerings available. Using our long experience as an ETF publication, we can help select those ETFs the matter and may not be repetitive. The result is a more manageable list of issues from which to choose from.

The following analysis features our top selections of small and mid-cap ETFs. We believe these constitute the best index-based offerings individuals and financial advisers may utilize.

Within this category list we include the top small and mid-cap blended ETFs (growth and value) as well as individual selections based on growth or value.  

Weâ¿¿re not ranking these ETFs so donâ¿¿t let the listing order mislead you. Although we may use a few of these in ETF Digest portfolios, itâ¿¿s not our intention to recommend one over another.

These ETFs are based on indices tied to well-known index providers including Russell, S&P, Barclays, MSCI, Dow Jones etc.

Uniquely, investors should remember, small and mid-cap issues usually carry higher beta (volatility or higher risk levels) than their large-cap peers. This means during times of higher economic growth combined with accommodative Fed monetary policies (2009-2011) returns in these two sectors will outperform. But, the opposite situation does occur should either of these conditions.

Remaining aware of these benefits and risks should be important to every investor.

One thing youâ¿¿ll note with charts posted is the similarities in trends and performance. This isnâ¿¿t a coincidence given overall index constituent similarities. Further, the easy money policies of the Fed during the period covered have made performance results hardly distinguishable one from another.

MDY (S&P MidCap ETF) is one of the blended which incorporates the growth and value segment of the S&P MidCap 400 Index. It was launched in April 1995 and has AUM (Assets under Management) over $10.5 billion with average daily trading volume just under 2M shares. The expense ratio is .25%; the current dividend is $.44 making the current yield around 1%. As of June 2011, YTD performance has been just under 4%.

You should note there are leveraged long and inverse issues that attempt to match the index not to mention futures and options contracts. 

Data as of June 2011

MDY Top Ten Holdings & Weightings

  1. Vertex Pharmaceuticals (VRTX):                      0.91%
  2. Cimarex Energy Company (XEC):                    0.77%
  3. BorgWarner, Inc. (BWA):                                 0.70%
  4. Lubrizol Corporation (LZ):                               0.70%
  5. Green Mountain Coffee, Inc. (GMCR):             0.63%
  6. Pride International, Inc. (PDE):                        0.63%
  7. Perrigo Company (PRGO):                              0.61%
  8. Bucyrus International, Inc. A (BUCY):              0.60%
  9. Ametek, Inc. (AME):                                         0.60%
  10. New York Community Bancorp, Inc. (NYB):     0.59%


IJH (iShares MidCap ETF) is an alternative you could evaluate versus MDY. It⿿s repetitive since it follows the same index as MDY (S&P MidCap 400 ETF). It was launched in May 2000 with AUM of $11 billion and average daily trading volume of less than 1M shares. The lower trading volume than MDY with a similar amount of AUM indicates a large portion of assets here in financial plans for ⿿buy and hold⿝ investors. The distinguishing factor is the fee which is lower at .20%. The lower fee means slightly greater performance in return and dividend yield.

Data as of June 2011

IJH Top Ten Holdings & Weightings

  1. Vertex Pharmaceuticals (VRTX):                                  0.90%
  2. Green Mountain Coffee ,Inc. (GMCR):                         0.83%
  3. Lubrizol Corporation (LZ):                                           0.71%
  4. Cimarex Energy Company (XEC):                                0.67%
  5. BorgWarner, Inc. (BWA):                                            0.66%
  6. Dollar Tree Stores, Inc. (DLTR):                                  0.65%
  7. Bucyrus International, Inc. A (BUCY):                         0.61%
  8. SL Green Realty Corporation (SLG):                           0.61%
  9. Pride International, Inc. (PDE):                                      0.59%
  10. Perrigo Company (PRGO):                                          0.58%

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