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 that matter and may not be repetitive. The result is a more manageable list of issues from which to choose.

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 advisors 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.  

We're not ranking these ETFs so don't let the listing order mislead you. Although we may use a few of these in ETF Digest portfolios it's not our intention to recommend one over another.

These ETFs are based on indexes tied to well-known index providers including Russell, S&P, Barclays, MSCI, Dow Jones and so forth.

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 (2009-10011) 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 you'll note with charts posted is the similarities in trends and performance. This isn'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.

Both ProShares and DirexionShares offer inverse and leveraged long/short ETFs for investors wishing to hedge or speculate.

MDY (SPDR S&P MidCap ETF) follows the S&P MidCap 400 Index. It was launched in April 1995. The expense ratio is .25%. AUM (Assets under Management) equal $10 billion with average daily trading volume just under 3.6M shares. As of mid-September 2011 the annual dividend is $.74 making the current yield .50% and YTD return -6.90%.

Data as of September 2011

MDY Top Ten Holdings &Weightings

  1. Green Mountain Coffee Roasters, Inc. (GMCR): 1.13%
  2. Vertex Pharmaceuticals (VRTX): 0.93%
  3. BorgWarner Inc (BWA): 0.76%
  4. Lubrizol Corporation (LZ): 0.75%
  5. Dollar Tree Stores, Inc. (DLTR): 0.70%
  6. HollyFrontier Corp (HFC): 0.68%
  7. Cimarex Energy Company (XEC): 0.66%
  8. Perrigo Company (PRGO): 0.66%
  9. Macerich Company (MAC): 0.60%
  10. Ametek, Inc. (AME): 0.59%

IJH (iShares MidCap ETF) also follows the S&P MidCap 400 Index. It was launched in May 2000. The expense ratio is lower at .20%. AUM of $9 billion and average daily trading volume is 1.3M shares. As of mid-September 2011 the annual dividend is $.56 making the yield .66% and YTD return -6.90%.

Data as of September 2011

IJH Top Ten Holdings & Weightings

  1. Green Mountain Coffee Roasters, Inc. (GMCR): 1.23%
  2. Vertex Pharmaceuticals (VRTX): 0.87%
  3. Dollar Tree Stores, Inc. (DLTR): 0.82%
  4. Lubrizol Corporation (LZ): 0.81%
  5. Perrigo Company (PRGO): 0.74%
  6. BorgWarner Inc (BWA): 0.73%
  7. HollyFrontier Corp (HFC): 0.70%
  8. Macerich Company (MAC): 0.60%
  9. Ametek, Inc. (AME): 0.59%
  10. Church & Dwight Company, Inc. (CHD): 0.58%

IWR (iShares Russell MidCap ETF) follows the Russell MidCap Index. The fund was launched in July 2007. The expense ratio is .23%. AUM equal $6 billion and average daily trading volume is 430K shares. As of mid-September 2011 the annual dividend yield is 1.47 and YTD return -6.02%.  

Data as of September 2011

IWR Top Ten Holdings & Weightings

  1. Equity Residential (EQR): 0.47%
  2. Annaly Capital Management, Inc. (NLY): 0.45%
  3. H.J. Heinz Company (HNZ): 0.45%
  4. Spectra Energy Corp (SE): 0.44%
  5. PPL Corp (PPL): 0.44%
  6. Consolidated Edison, Inc. (ED): 0.43%
  7. Marsh & McLennan Companies, Inc. (MMC): 0.43%
  8. Lorillard, Inc. (LO): 0.42%
  9. Vornado Realty Trust Shs of Benef Int (VNO): 0.42%
  10. Noble Energy Inc (NBL): 0.41%

 

VOT (Vanguard MidCap Growth ETF) follows the MSCI US MidCap Growth Index which represent the growth companies of the MSCI US Mid Cap 450 Index. The fund was launched in August 2006. The expense ratio is .15%. AUM equal 1.1 billion and average daily trading volume is 211K shares. As of mid-September 2011 the annual dividend yield is .53% and YTD return -4.33%.  

Alternative issues to consider include IJK (iShares S&P MidCap 400 Growth ETF) and IWP (iShares Russell MidCap Growth). Both funds have high AUM and good liquidity but higher expense ratios. Their advantage may be with index structure and better liquidity.

Data as of September 2011

VOT Top Ten Holdings & Weightings

  1. El Paso Corporation (EP): 1.15%
  2. Netflix, Inc. (NFLX): 1.07%
  3. Green Mountain Coffee Roasters, Inc. (GMCR): 0.92%
  4. AmerisourceBergen Corp (ABC): 0.92%
  5. Consol Energy Inc (CNX): 0.89%
  6. Mylan Inc (MYL): 0.87%
  7. Starwood Hotels & Resorts Worldwide Inc (HOT): 0.87%
  8. FMC Technologies, Inc. (FTI): 0.87%
  9. Vertex Pharmaceuticals (VRTX): 0.86%
  10. CF Industries Holdings Inc (CF): 0.81%

 

VOE (Vanguard MidCap Value ETF) follows the MSCI US MidCap Value Index. The fund was launched in August 2006. The expense ratio is .15%.  AUM equal $770M and average daily trading volume is 109K shares. As of mid-September 2011 the annual dividend was $1.00 making the current yield 2$ and YTD return -6.89%.

Alternative choices might include IJJ (iShares S&P 400 MidCap Value ETF) with AUM of $2 billion and an expense ratio of .25% and YTD -10.47%

Data as of September 2011

VOE Top Ten Holdings & Weightings

  1. Humana (HUM): 1.14%
  2. Dover Corporation (DOV): 1.06%
  3. Goodrich Corporation (GR): 1.01%
  4. AvalonBay Communities Inc (AVB): 0.93%
  5. Limited Brands, Inc. (LTD): 0.89%
  6. Bunge Ltd (BG): 0.84%
  7. Cooper Industries PLC. (CBE): 0.83%
  8. Coca-Cola Enterprises Inc: 0.81%
  9. Mattel, Inc. (MAT): 0.81%
  10. Liberty Media Corp., IActive Shs A (LINTA): 0.80%

IWS (iShares Russell MidCap Value ETF) follows the Russell MidCap Value Index. The fund was launched in July 2001. The expense ratio is .31%. AUM equal $2.5 billion and average daily trading volume is around 648K shares. As of mid-September 2011 the current dividend is $.55 making the current yield 1.30% and YTD return -7.84%.

Data as of September 2011

IWS Top Ten Holdings & Weightings

  1. Annaly Capital Management, Inc. (NLY): 0.91%
  2. Spectra Energy Corp (SE): 0.89%
  3. Equity Residential (EQR): 0.88%
  4. PPL Corp (PPL): 0.88%
  5. Consolidated Edison, Inc. (ED): 0.87%
  6. Marsh & McLennan Companies, Inc. (MMC): 0.86%
  7. Lorillard, Inc. (LO): 0.84%
  8. Aon Corp. (AON): 0.81%
  9. HCP Inc (HCP): 0.80%
  10. Progress Energy, Inc. (PGN): 0.76%

IWM (iShares Russell 2000 ETF) tracks the Russell 2000 index which consists of the smallest 2000 stocks in the Russell 3000 index. The fund was launched in May 2000. The expense ratio is .28%. AUM equal $13.7 billion and average daily trading volume exceeds 80M shares. As of mid-September 2011 the dividend is $.52 making the current yield roughly .74% and YTD return -11.62%.

Data as of September 2011

IWM Top Ten Holdings & Weightings

  1. InterDigital Inc (IDCC): 0.29%
  2. MFA Financial, Inc. (MFA): 0.24%
  3. American Campus Communities, Inc. (ACC): 0.24%
  4. Healthspring, Inc. (HS): 0.24%
  5. World Fuel Services Corporation (INT): 0.24%
  6. Mid-America Apartment Communities (MAA): 0.24%
  7. Home Properties, Inc. (HME): 0.24%
  8. Coeur D'Alene Mines Corporation (CDE): 0.23%
  9. Berry Petroleum Co (BRY): 0.23%
  10. Henry Jack & Associates, Inc. (JKHY): 0.23%

IJR (iShares S&P 600 SmallCap 600 ETF) follows the S&P SmallCap 600 Index. The fund was launched in May 2000. . The expense ratio is .20%. AUM equal nearly $6 billion and average daily trading volume is around 1.9M shares. As of mid-September 2011 the dividend is $.48 making the current yield .75% and YTD return-9.06%.

Data as of September 2011

IJR Top Ten Holdings & Weightings

  1. Regeneron Pharmaceuticals, Inc. (REGN): 0.98%
  2. Healthspring, Inc. (HS): 0.59%
  3. World Fuel Services Corporation (INT): 0.59%
  4. Mid-America Apartment Communities (MAA): 0.58%
  5. Home Properties, Inc. (HME): 0.58%
  6. Signature Bank (SBNY): 0.56%
  7. Crocs, Inc. (CROX): 0.54%
  8. Tanger Factory Outlet Centers (SKT): 0.54%
  9. BioMed Realty Trust Inc (BMR): 0.54%
  10. Clarcor Inc. (CLC): 0.52%

VB (Vanguard Small-Cap ETF) follows the MSCI US Small Cap 1750 Index which consists of 1750 small cap stocks in U.S. markets. The fund was launched in January 2004. The expense ratio is .15% . AUM equal $4.1 billion and average daily trading volume exceeds 739K shares. As of mid-September 2011 the current dividend is $84 making the current yield 1.25% and YTD return -8.89%.

Data as of September 2011

VB Top Ten Holdings & Weightings

  1. CMT Market Liquidity Rate: 0.36%
  2. Polycom, Inc. (PLCM): 0.33%
  3. American Capital Agency Corp. (AGNC): 0.29%
  4. Tempur-Pedic International, Inc. (TPX): 0.27%
  5. Varian Semiconductor Equipment Associates, Inc. (VSEA): 0.27%
  6. Wabco Holdings Incorporated (WBC): 0.27%
  7. Camden Property Trust (CPT): 0.26%
  8. Gardner Denver, Inc. (GDI): 0.25%
  9. Essex Property Trust (ESS): 0.25%
  10. Gentex Corporation (GNTX): 0.25%

IWO (iShares Russell 2000 Growth ETF) follows the Russell 2000 Growth Index which includes the 2000 Small Cap growth companies in the U.S. equity market. The fund was launched in July 2000. The expense ratio is .25%. AUM exceeds $3.2 billion and average daily trading volume is over 2.3M shares. As of mid-September 2011 the dividend is $.35 making the current yield .43% and YTD return -8.9%.

Alternative choices include IJT (iShares S&P SmallCap 600 Growth ETF) which follows the S&P SmallCap 600/Citigroup Growth Index. It features an expense ratio of .25%. AUM equal $1.5 billion with average daily volume of 270K shares and YTD return -5.55%. Another choice is VBK (Vanguard Small-Cap Growth ETF) tracks the MSCI US Small Cap Growth Index. AUM exceeds $1.8 billion and average daily trading volume is only 287K shares and YTD -6.79%.

Data as of September 2011

IWO Top Ten Holdings

  1. InterDigital Inc (IDCC): 0.58%
  2. Mid-America Apartment Communities (MAA): 0.48%
  3. Home Properties, Inc. (HME): 0.48%
  4. Berry Petroleum Co (BRY): 0.46%
  5. Henry Jack & Associates, Inc. (JKHY): 0.46%
  6. Clean Harbors, Inc. (CLH): 0.46%
  7. Sothebys A (BID): 0.46%
  8. CVR Energy, Inc. (CVI): 0.46%
  9. Rosetta Resources, Inc. (ROSE): 0.44%
  10. Tanger Factory Outlet Centers (SKT): 0.44%

VBR (Vanguard Small-Cap Value ETF) follows the MSCI US Small Cap Value Index. The fund was launched in January 2004. The expense ratio is.15%. AUM are near $1.7 billion while average daily trading volume is only 135K shares. As of mid-September 2011 the annual dividend is $1.27 making the current yield 2.11% and YTD return -11.10%.

Alternative choices include IWN (iShares Russell 2000 Value ETF) which follows the Russell 2000 Value Index and is the oldest of the group being launched in July 2000. It also has the highest expense ratio at .41%. IJS (iShares S&P SmallCap 600 Value ETF) follows the S&P SmallCap 600/Citigroup Value Index and completes the value area selections for now. It was launched in July 2000 and has an expense ratio of .25%.  

Data as of September 2011

VBR Top Ten Holdings & Weightings

  1. American Capital Agency Corp. (AGNC): 0.58%
  2. Camden Property Trust (CPT): 0.52%
  3. Essex Property Trust (ESS): 0.51%
  4. Corn Products International, Inc. (CPO): 0.49%
  5. BE Aerospace Inc (BEAV): 0.49%
  6. First Niagara Financial Group Inc (FNFG): 0.47%
  7. Domtar Corp (UFS): 0.45%
  8. Cooper Companies (COO): 0.43%
  9. Foot Locker Inc (FL): 0.43%
  10. BRE Properties, Inc. (BRE): 0.43%

Mid and Small Cap ETF sectors have responded well to preexisting Fed policies of ZIRP (Aero Interest Rate Policies) and especially well to QE (Quantitative Easing). Since these sectors have higher betas (volatility and risk) they can outperform on the upside when markets are moving higher abetted by Fed policies. Naturally, the opposite can and will occur when markets correct or head south. Risk adverse investors are advised to use caution in this regard.

As stated with other summaries, remember ETF sponsors must issue and their interests aren't aligned with yours. They have a business interest and wish to have a competitive presence in any popular sector.

For further information about portfolio structures using technical indicators like DeMark and other indicators see www.etfdigest.com . You may follow us on Facebook as well and join our group conversations.

You may address any feedback to: feedback@etfdigest.com   

The ETF Digest has no current position in the featured securities.

(Source for data is from ETF sponsors and various ETF data providers.)
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

Dave Fry is founder and publisher of ETF Digest, Dave's Daily blog and the best-selling book author of Create Your Own ETF Hedge Fund, A DIY Strategy for Private Wealth Management, published by Wiley Finance in 2008. A detailed bio is here: Dave Fry.