Top 10 Mid-Cap ETFs

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( ETF Digest) -- There are more than 40 ETFs in the category including growth, value and blend. We're going to focus on blended issues which intuitively would be the most usable for most investors.  

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

Uniquely, investors should remember, mid-cap issues may carry a 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 and bullish market conditions returns in these two sectors should outperform. But, the opposite can occur when these conditions reverse.

Remaining aware of these benefits and risks should be important to every investor. Further given bullish conditions it sometimes becomes difficult to ascertain and distinguish between small-, mid- and large-cap sectors. 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 from one to another.

We rank the top 10 ETF by our proprietary stars system as outlined below. However, given that we're sorting these by both short and intermediate issues we have split the rankings as we move from one classification to another.


Strong established linked index
Excellent consistent performance and index tracking
Low fee structure
Strong portfolio suitability
Excellent liquidity


Established linked index even if "enhanced"
Good performance or more volatile if "enhanced" index
Average to higher fee structure
Good portfolio suitability or more active management if "enhanced" index
Decent liquidity


Enhanced or seasoned index
Less consistent performance and more volatile
Fees higher than average
Portfolio suitability would need more active trading
Average to below average liquidity


Index is new
Issue is new and needs seasoning
Fees are high
Portfolio suitability also needs seasoning
Liquidity below average

We feature a technical view of conditions from monthly chart views. Simplistically, we recommend longer-term investors stay on the right side of the 12 month simple moving average. When prices are above the moving average, stay long, and when below remain in cash or short. Some more interested in a fundamental approach may not care so much about technical issues preferring instead to buy when prices are perceived as low and sell for other reasons when high; but, this is not our approach.

Premium members to the ETF Digest receive added signals when markets become extended such as DeMark triggers to exit overbought/oversold conditions.

For traders and investors wishing to hedge, leveraged and inverse issues are available to utilize from ProShares and Direxion and where available these are noted.

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

#10: SPDR DJ Wilshire Mid-Cap ETF (EMM )

 

EMM follows the Dow Jones Wilshire U.S. Mid-Cap Total Stock Market Index which is a float-adjusted market capitalization weighted index that reflects the shares of securities of the mid cap portion of the Dow Jones U.S. Total Stock Market index actually available to investors in the marketplace.

The Mid-Cap Index includes the components ranked 501-1000 by full market capitalization. The fund was launched in November 2005. The expense ratio is .25%. AUM equal $72 million and average daily trading volume is less than 8K shares. As of late January 2012 the annual dividend yield was 1.34% and YTD return 6.52%. The one year return was 2.70%.

Data as of First Quarter 2012

EMM Top Ten Holdings & Weightings
  1. Pharmasset, Inc. (VRUS): 0.61%
  2. Liberty Media Corporation A (LMCA): 0.59%
  3. Kansas City Southern, Inc. (KSU): 0.50%
  4. Digital Realty Trust, Inc. (DLR): 0.47%
  5. Celanese Corporation (CE): 0.46%
  6. Seagate Technology PLC (STX): 0.46%
  7. Ametek, Inc. (AME): 0.45%
  8. NiSource Inc (NI): 0.44%
  9. Macerich Company (MAC): 0.44%
  10. Pall Corporation (PLL): 0.44%

 

 

#9: RevenueShares Mid-Cap ETF (RWK)

RWK follows the Revenue Shares Mid Cap Index which tracks the S&P Mid-Cap400 but each security in the fund is ranked by top line revenue instead of market capitalization. The fund was launched in February 2008. The expense ratio is .54%. AUM equal $134 million and average daily trading volume is 21K shares. As of late January 2012 the annual dividend yield was 1.55% and YTD return 7.81%. The one year return was 2.64%.

Data as of First Quarter 2012

RWK Top Ten Holdings & Weightings
  1. Ingram Micro, Inc. (IM): 3.18%
  2. Tech Data Corporation (TECD): 2.09%
  3. Arrow Electronics Inc (ARW): 2.02%
  4. Avnet Inc (AVT): 1.80%
  5. ManpowerGroup (MAN): 1.69%
  6. Health Net Inc (HNT): 1.63%
  7. Smithfield Foods, Inc. (SFD): 1.39%
  8. Community Health Systems Inc (CYH): 1.25%
  9. KBR, Inc. (KBR): 1.08%
  10. Office Depot Inc (ODP): 1.06%

#8: Schwab Mid-Cap ETF (SCHM)

SCHM follows the Dow Jones U.S. Mid-Cap Total Stock Market Index which is a float-adjusted market capitalization weighted index that reflects the shares of securities of the mid cap portion of the Dow Jones U.S. Total Stock Market index actually available to investors in the marketplace. The Mid-Cap Index includes the components ranked 501-1000 by full market capitalization.

The fund was launched in January 2011. The expense ratio is .13%. As a new ETF there isn't as much history but the low fee combined with commission-free trading for Schwab clients makes it an interesting entrant. As of late January 2012 the annual dividend is projected at 1.43% and YTD return was 6.96%. The one year return was 2.89%.

Data as of First Quarter 2012

SCHM Top Ten Holdings & Weightings
  1. Pharmasset, Inc. (VRUS): 0.61%
  2. Liberty Media Corporation A (LMCA): 0.60%
  3. Kansas City Southern, Inc. (KSU): 0.50%
  4. Digital Realty Trust, Inc. (DLR): 0.46%
  5. Celanese Corporation (CE): 0.46%
  6. Seagate Technology PLC (STX): 0.46%
  7. Ametek, Inc. (AME): 0.45%
  8. Macerich Company (MAC): 0.44%
  9. Pall Corporation (PLL): 0.44%
  10. NiSource Inc (NI): 0.44%

 

#7: iShares Morningstar Mid-Core ETF (JKG)

JKG follows the Morningstar Mid-Core Index which measures the performance of mid cap stocks that have exhibited average growth and value characteristics. The fund was launched in June 2004. The expense ratio is .25%. AUM equal $150 million and average daily trading volume is 17K shares.

As of late January 2012 the annual dividend yield is 1.33% and YTD return 7.27%. The one year return was 5.75%.

Data as of First Quarter 2012

JKG Top Ten Holdings & Weightings
  1. Dover Corporation (DOV): 1.18%
  2. Murphy Oil Corporation (MUR): 1.18%
  3. Analog Devices Inc (ADI): 1.17%
  4. Host Hotels & Resorts Inc (HST): 1.14%
  5. Health Care REIT, Inc. (HCN): 1.14%
  6. Zimmer Holdings Inc (ZMH): 1.13%
  7. AmerisourceBergen Corp (ABC): 1.10%
  8. Paychex, Inc. (PAYX): 1.07%
  9. Ingersoll-Rand PLC (IR): 1.04%
  10. Harley-Davidson Inc (HOG): 1.01%

#6: First Trust Core AlphaDEX ETF (FNX)

 

FNX follows the Defined Mid-Cap Core Index which is an "enhanced" index created and administered by Standard & Poor's which employs the AlphaDEX stock selection methodology to select stocks from the S&P Mid-Cap 400 Index. The fund was launched in May 2007. The expense ratio is .70%. AUM equal $257 million and average daily trading volume is 86K shares.

As of late January 2012 the annual dividend yield was .51% and YTD return 6.38%. The one year return was 4.10%.

Data as of First Quarter 2012

FNX Top Ten Holdings & Weightings
  1. Amerigroup Corporation (AGP): 0.71%
  2. Reliance Steel and Aluminum (RS): 0.70%
  3. Kindred Healthcare, Inc. (KND): 0.70%
  4. Unit Corporation (UNT): 0.67%
  5. Cabot Corporation (CBT): 0.65%
  6. Steel Dynamics Inc (STLD): 0.65%
  7. Universal Corporation (UVV): 0.64%
  8. Arrow Electronics Inc (ARW): 0.64%
  9. Rent-A-Center, Inc. (RCII): 0.64%
  10. Huntington Ingalls Industries Inc (HII): 0.64%

 

#5: Vanguard Extended Market ETF (VXF)

VXF follows the S&P Completion Index represents mid- and small-capitalization stocks in the U.S. equity market. The index in sum is a blend of both small and mid-cap constituents. The fund was launched in December 2001. The expense ratio is .12%. AUM equal $1.2 billion and average daily trading volume is 80K shares.

As of late January 2012 the annual dividend yield was 1.14% and YTD return was 7.60&. The one year return was 1.20%.

Data as of First Quarter2012

VXF Top Ten Holdings & Weightings
  1. Las Vegas Sands Corp (LVS): 0.67%
  2. General Motors Co (GM): 0.53%
  3. Green Mountain Coffee Roasters, Inc. (GMCR): 0.52%
  4. Alexion Pharmaceuticals, Inc. (ALXN): 0.52%
  5. Crown Castle International Corp (CCI): 0.46%
  6. Vertex Pharmaceuticals (VRTX): 0.41%
  7. Dollar Tree Stores, Inc. (DLTR): 0.40%
  8. Perrigo Company (PRGO): 0.40%
  9. Bunge Ltd (BG): 0.38%
  10. Lyondell Basell Industries NV (LYB): 0.34%

#4: Vanguard Mid-Cap ETF (VO)

VO follows the MSCI US Mid Cap 450 Index which represents the universe of mid-capitalization companies in the U.S. equity market. The fund was launched in January 2004. The expense ratio is .12%. AUM equals $3.5 billion and average daily trading volume is 166K shares.

As of late January 2012 the annual dividend yield was 1.36% and YTD return 6.91%. The one year return was 1.20%.

Data as of First Quarter 2012

VO Top Ten Holdings & Weightings
  1. Goodrich Corporation (GR): 0.78%
  2. El Paso Corporation (EP): 0.70%
  3. Humana (HUM): 0.64%
  4. Green Mountain Coffee Roasters, Inc. (GMCR): 0.62%
  5. Alexion Pharmaceuticals, Inc. (ALXN): 0.61%
  6. AvalonBay Communities Inc (AVB): 0.56%
  7. Motorola Mobility Holdings, Inc. (MMI): 0.55%
  8. Limited Brands, Inc. (LTD): 0.54%
  9. AmerisourceBergen Corp (ABC): 0.53%
  10. Cerner Corporation (CERN): 0.51%

 

#3: iShares Russell Mid-Cap ETF (IWR )

IWR follows the Russell Mid-Cap Index. The fund was launched in July 2007. The expense ratio is .23%. AUM equal $6 billion and average daily trading volume is 390K shares. As of late January 2012 the annual dividend yield was 1.58% and YTD return was 6.41%. The one year return was 2.06%.

Data as of First Quarter 2012

IWR Top Ten Holdings & Weightings
  1. El Paso Corporation (EP): 0.54%
  2. Spectra Energy Corp (SE): 0.53%
  3. Intuitive Surgical, Inc. (ISRG): 0.48%
  4. Consolidated Edison, Inc. (ED): 0.48%
  5. H.J. Heinz Company (HNZ): 0.46%
  6. Ecolab, Inc. (ECL): 0.46%
  7. Marsh & McLennan Companies, Inc. (MMC): 0.46%
  8. PPL Corp (PPL): 0.45%
  9. HCP Inc (HCP): 0.45%
  10. Equity Residential (EQR): 0.45%

#2: iShares Mid-Cap ETF (IJH )

IJH also follows the S&P Mid-Cap 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 1M shares.

As of late January 2012 the annual dividend yield was 1.20% and YTD return was 6.80%. The one year return was 1.99%.

#1: SPDR S&P Mid-Cap ETF (MDY)

MDY follows the S&P Mid-Cap 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 3.4M shares.

As of late January 2012 the annual dividend yield was 1.00% and YTD return was 6.80%. The one year return was 1.99%.

Data as of First Quarter 2012

MDY Top Ten Holdings & Weightings
  1. Dollar Tree Stores, Inc. (DLTR): 0.93%
  2. Perrigo Company (PRGO): 0.85%
  3. Kansas City Southern, Inc. (KSU): 0.70%
  4. BorgWarner Inc (BWA): 0.67%
  5. Hansen Natural Corporation (HANS): 0.66%
  6. Ametek, Inc. (AME): 0.64%
  7. Green Mountain Coffee Roasters, Inc. (GMCR): 0.63%
  8. Macerich Company (MAC): 0.61%
  9. Church & Dwight Company, Inc. (CHD): 0.59%
  10. Vertex Pharmaceuticals (VRTX): 0.56%

As stated in the last chart (EMM) there isn't much to choose from the top 10 unless you're concerned about liquidity or fees. Nevertheless these top 10s do distinguish themselves from the 30 others in the category.

Once again it's our strong belief in technical issues due to two bear markets in the past decade not to mention severe volatility in 2011. DeMark Indicators add a measure of safety if only to sleep well at night which for many is an important risk management issue.

It's also important to remember that ETF sponsors have their own competitive business interests when issuing products which may not necessarily align with your investment needs. New ETFs from highly regarded and substantial new providers are also being issued. These may include Charles Schwab's ETFs and Scottrade's Focus Shares which both are issuing new ETFs with low expense ratios and commission free trading at their respective firms. These may also become popular as they become seasoned. 

For further information about portfolio structures using technical indicators like DeMark and other indicators, take a free 14-day trial at ETF Digest . Follow us on Twitter and Facebook as well and join our group conversations.

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

The ETF Digest has no current positions in the featured ETFs.

(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.