MDY: A Bet On The Return Of Mid-Caps

seekingalpha04-20

SPDR S&P MidCap 400 ETF Trust is an ETF that invests in 400 mid-sized US companies.MDY was one of the first ETFs in 1995 and has amassed $21.3 billion in assets under management.While mid-cap stocks ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2428614463?lang=en_US&edition=fundamental","thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/173552241/image_173552241.jpg","is_english":true,"pubTime":"2024-04-20 10:38","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2428614463","market":"fut","top_or_hot":-1,"title":"MDY: A Bet On The Return Of Mid-Caps","media":"seekingalpha","content":"<div>\n<p>SPDR S&P MidCap 400 ETF Trust is an ETF that invests in 400 mid-sized US companies.MDY was one of the first ETFs in 1995 and has amassed $21.3 billion in assets under management.While mid-cap stocks ...</p>\n\n<a href=\"https://seekingalpha.com/article/4684830-mdy-bet-on-return-of-mid-caps-spdr-s-and-p-midcap-400-etf\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>MDY: A Bet On The Return Of Mid-Caps</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nMDY: A Bet On The Return Of Mid-Caps\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-04-20 10:38 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4684830-mdy-bet-on-return-of-mid-caps-spdr-s-and-p-midcap-400-etf><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SPDR S&P MidCap 400 ETF Trust is an ETF that invests in 400 mid-sized US companies.MDY was one of the first ETFs in 1995 and has amassed $21.3 billion in assets under management.While mid-cap stocks ...</p>\n\n<a href=\"https://seekingalpha.com/article/4684830-mdy-bet-on-return-of-mid-caps-spdr-s-and-p-midcap-400-etf\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"VST","symbol_name":"Vistra Energy Corp.","start_time":0,"source_url":"https://seekingalpha.com/article/4684830-mdy-bet-on-return-of-mid-caps-spdr-s-and-p-midcap-400-etf","article_id":"2428614463","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/173552241/image_173552241.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2428614463","pubTimestamp":1713580717,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"SPDR S&P MidCap 400 ETF Trust is an ETF that invests in 400 mid-sized US companies.MDY was one of the first ETFs in 1995 and has amassed $21.3 billion in assets under management.While mid-cap stocks h","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"VST":"Vistra Energy Corp.","LU0056508442.USD":"贝莱德世界科技基金A2","BK4576":"AR","QQQ":"纳指100ETF","IE00BJJMRY28.SGD":"Janus Henderson Balanced A Inc SGD","MSFT":"微软","IE00BMPRXN33.USD":"NEUBERGER BERMAN 5G CONNECTIVITY \"A\" (USD) ACC","LU0109392836.USD":"富兰克林科技股A","IVV":"标普500指数ETF","BK4577":"网络游戏","SPY.AU":"SPDR® S&P 500® ETF Trust","SSO":"两倍做多标普500ETF","LU0053671581.USD":"摩根大通美国小盘成长股 A(dist)","LU0011850046.USD":"贝莱德全球长线股票 A2 USD","BK4579":"人工智能","FNX.AU":"FINEXIA FINANCIAL GRP LTD","LU0466842654.USD":"HSBC ISLAMIC GLOBAL EQUITY INDEX \"A\" (USD) ACC","LU0097036916.USD":"贝莱德美国增长A2 USD","LU0320765059.SGD":"FTIF - Franklin US Opportunities A Acc SGD","SAIA":"Saia Inc.","SDS":"两倍做空标普500ETF","RS":"Reliance Steel & Aluminum Co","SH":"标普500反向ETF","WSM":"Williams-Sonoma Inc","GDDY":"Godaddy Inc.","IE00BD6J9T35.USD":"NEUBERGER BERMAN NEXT GENERATION MOBILITY \"A\" (USD) ACC","XMMO":"Invesco S&P MidCap Momentum ETF","LU0444971666.USD":"天利全球科技基金","LU1861215975.USD":"贝莱德新一代科技基金 A2","LU0289961442.SGD":"SUSTAINABLE GLOBAL THEMATIC PORTFOLIO \"AX\" (SGD) ACC","SPXU":"三倍做空标普500ETF","LU1861220033.SGD":"Blackrock Next Generation Technology A2 SGD-H","LU1642822529.SGD":"THREADNEEDLE (LUX) GLOBAL TECHNOLOGY \"A\" (SGD) ACC","FNX":"First Trust Mid Cap Core AlphaDE","IE00BKVL7J92.USD":"Legg Mason ClearBridge - US Equity Sustainability Leaders A Acc USD","MDY":"标普中型股400指数ETF-SPDR","PSTG":"Pure Storage Inc","UPRO":"三倍做多标普500ETF","LU0289739343.SGD":"SUSTAINABLE GLOBAL THEMATIC PORTFOLIO \"A\" (SGD) ACC","SPY":"标普500ETF","LU0957808578.USD":"THREADNEEDLE (LUX) GLOBAL TECHNOLOGY \"ZU\" (USD) ACC","LU0170899867.USD":"EASTSPRING INVESTMENTS WORLD VALUE EQUITY  \"A\" (USD) ACC","OEF":"标普100指数ETF-iShares",".SPX":"S&P 500 Index","OEX":"标普100","NVDA":"英伟达","IE00BDCRKT87.USD":"PINEBRIDGE GLOBAL DYNAMIC ASSET ALLOCATION \"ADC\" (USD) INC","FDN":"First Trust Dow Jones Internet I","APP":"AppLovin Corporation"},"translate_title":"MDY：押注中型股回归","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"APP":1,"XMMO":1,"WSM":1,"VST":1,"SPY.AU":1,"SPY":1,"SAIA":1,"RS":1,"QQQ":1,"PSTG":1,"NVDA":1,"MSFT":1,"MDY":1,"GDDY":1,"FNX.AU":1,"FNX":1,"FDN":0.9,"SH":0.6,"OEF":0.6,"OEX":0.6,"ESmain":0.6,"SDS":0.6,"SPXU":0.6,"SSO":0.6,"UPRO":0.6,".SPX":0.6,"IVV":0.6},"content_text":"SPDR S&P MidCap 400 ETF Trust is an ETF that invests in 400 mid-sized US companies.MDY was one of the first ETFs in 1995 and has amassed $21.3 billion in assets under management.While mid-cap stocks have historically outperformed large-cap stocks, this trend has reversed in the past 5 years.If interest rates drop in the future, mid-cap stocks could potentially rebound and outperform their large-cap peers.   Ziva_K/E+ via Getty Images Overview SPDR S&P MidCap 400 ETF Trust (NYSEARCA:MDY) is an exchange-traded fund launched and managed by State Street Global Advisors that invests in public equity markets of the United States. The fund offers access to 400 mid-sized companies from the USA operating in different sectors. Mid-cap stocks are defined as having a market capitalization between $2 and $10 billion USD. Stocks selected for the fund may include both growth and value stocks. Being one of the first ETFs to launch in the US, MDY incepted in 1995 and amassed assets under management [AUM] totaling $21.3 billion. The ETF has an expense ratio of 0.24%, representing the annual costs when investing in the ETF. Now, historically mid-cap stocks have outperformed their large-cap peers due to higher growth, although this trend reversed over the past 5 years. Since smaller companies generally have less liquidity they are more reliant on debt to fuel their growth. As interest rates jumped due to increased inflation in recent years, they faced increased financial pressure, being reflected in the given returns of small and mid-cap stocks. Nevertheless, as inflation has substantially cooled down since 2022, mid-cap stocks could face a tailwind amidst a shift of sentiment, if the Federal Reserve decides to decrease interest rates. Here, MDY offers investors a diversified investment vehicle to bet on the return of outperformance of mid-cap stocks. Data by YCharts As demonstrated in the chart above, mid-cap stocks substantially outperformed larger companies, represented by the S&P 500, until the Federal Reserve raised interest rates in 2022. Since then, the S&P 500 has nearly closed the gap in performance and came close to even outperforming MDY. Nevertheless, if interest rates decrease as in 2021, the market could rotate back towards more 'risky' mid-cap stocks with higher growth potential, yet lower profitability. Holdings SeekingAlpha Vistra Corp (VST): Vistra operates as a retail and electricity generation company, supplying electricity, and natural gas to commercial, and industrial customers in the U.S. Due to surging retail electricity prices, Vistra has been able to substantially expand its operating income over the past two years. As a result, shares are up 178% year-over-year. Williams-Sonoma (WSM): The company operates as an energy infrastructure company in the United States through a wide network of natural gas pipelines, and natural gas storage facilities. Despite falling natural gas prices, shares have advanced 137% YoY as the company is focusing on returning excess capital to shareholders through an increased dividend and a $1 billion buyback. Reliance (RS): The company is a diversified metal solutions provider in the U.S, Canada and internationally. With over 100,000 metal products such as alloy, aluminum, carbon steel and titanium, the company serves customers in a wide range of industries such as construction, transportation, aerospace, and energy. Shares are up 31% YoY. Other holdings: While the above-mentioned stocks are all industrial companies, the ETF also includes many innovative technology names such as data storage company Pure Storage (PSTG) and domain-hosting GoDaddy (GDDY). Still, the ETF is mostly concentrated on industrials, accounting for 21% of its assets, followed by Consumer Cyclicals (15.8%) and Financials (15.1%). The technology sector is represented with 11.3% of its assets. Overall, the ETF currently has 401 holdings, meaning that it is quite diversified which is also visible by its small weight on individual holdings. Performance Data by YCharts Although MDY delivered a strong return of over 16% over the past year, it underperformed competing ETFs. Here, First Trust Mid Cap Core AlphaDex ETF (FNX) returned nearly 20% YoY, while Invesco S&P MidCap Momentum ETF (XMMO) returned 45% YoY. While MDY and FNX follow a similar strategy the composition of the funds are different, explaining the difference in performance. For instance, FNX includes AppLovin (APP) as one of its largest holdings, which surged over 300% over the past year. Such outliers likely helped FNX to outperform MDY ETF. However, XMMO substantially outperformed both mid-cap funds. XMMO ETF is much more concentrated with only 81 holdings and places a 5% weight on its largest holding, Vistra. Although Vistra is also MDY's largest holding, the significant weight helped XMMO to outperform over the past couple of months. Overall, the ETFs are quite closely tied in terms of performance, their costs differ slightly. XMMO has a higher expense ratio than MDY at 0.34% annually and FNX charges investors 0.6%. Valuations Data by YCharts As mentioned earlier, many of MDY's holdings saw a substantial jump in operating income as their earnings are quite volatile. This is very well represented in their given P/E ratios. Here, Saia (SAIA) and Pure Storage (PSTG) trade at the high end of the graph with P/E ratios of above 30x. Based on its historical valuation, SAIA may therefore be overvalued. While technology names such as Pure Storage and GoDaddy (GDDY) may appear pricey too, at 32 times P/E and 22 times P/E, compared to many technology companies in the NASDAQ Index, they are fairly priced, in my opinion. Nevertheless, the ETF also includes many industrial value stocks such as Reliance or Vistra, which despite rallying over the past year, still trade at reasonable valuations. Here, Vistra trades at just 17 times forward earnings, while Reliance trades at around 16 times forward earnings. On average, MDY ETF trades at a P/E ratio of 21x, which is lower than the S&P 500 (SPY), trading at an average of 25 times Price to Earnings and lower than the Nasdaq Index (QQQ) at a P/E ratio of 34.4. Takeaways With the spotlight on large-cap AI pioneers such as NVIDIA (NVDA) and Microsoft (MSFT), mid-cap stocks have been left out of the significant rally over the past years. Nevertheless, small and mid-cap stocks outperformed larger companies historically due to their ability to grow revenues and earnings at a greater pace, despite being more susceptible to changes in interest rates. Thus, if the macro-environment changes to the advantage of mid-caps, MDY could potentially close in on its inferior performance to SPY and reward patient investors. Nevertheless, there are risks to consider. As geopolitical risks continue to weigh on investors' sentiment, a further escalation will likely hurt mid-caps at a greater scale due to their high volatility and lower liquidity to response to an economic downturn.  Nevertheless, MDY offers an opportunity to bet on the return of Mid-Cap stocks at a reasonable expense ratio, compared to alternative ETFs.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":1,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2428614463"}