Should SPDR S&P MidCap 400 ETF (MDY) Be on Your Investing Radar?

If you're interested in broad exposure to the Mid Cap Blend segment of the US equity market, look no further than the SPDR S&P MidCap 400 ETF (MDY), a passively managed exchange traded fund launched on 05/04/1995.

The fund is sponsored by State Street Global Advisors. It has amassed assets over $20.17 billion, making it one of the largest ETFs attempting to match the Mid Cap Blend segment of the US equity market.

Why Mid Cap Blend

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.

Typically holding a combination of both growth and value stocks, blend ETFs also demonstrate qualities seen in value and growth investments.

Costs

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

Annual operating expenses for this ETF are 0.23%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.45%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Industrials sector--about 20.70% of the portfolio. Financials and Consumer Discretionary round out the top three.

Looking at individual holdings, Williams-Sonoma Inc. (WSM) accounts for about 0.82% of total assets, followed by Interactive Brokers Group Inc. Class A (IBKR) and Expand Energy Corporation (EXE).

The top 10 holdings account for about 6.56% of total assets under management.

Performance and Risk

MDY seeks to match the performance of the S&P MidCap 400 Index before fees and expenses. The S&P MidCap 400 Index is composed of 400 selected stocks listed on national stock exchanges, and spans a broad range of major industry groups.

The ETF has lost about -14.84% so far this year and is down about -9.40% in the last one year (as of 04/07/2025). In the past 52-week period, it has traded between $483.74 and $620.12.

The ETF has a beta of 1.06 and standard deviation of 20.05% for the trailing three-year period, making it a medium risk choice in the space. With about 402 holdings, it effectively diversifies company-specific risk.

Alternatives

SPDR S&P MidCap 400 ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, MDY is a good option for those seeking exposure to the Style Box - Mid Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.

The Vanguard Mid-Cap ETF (VO) and the iShares Core S&P Mid-Cap ETF (IJH) track a similar index. While Vanguard Mid-Cap ETF has $67.22 billion in assets, iShares Core S&P Mid-Cap ETF has $81.68 billion. VO has an expense ratio of 0.04% and IJH charges 0.05%.

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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This article originally published on Zacks Investment Research (zacks.com).

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