The iShares Russell 1000 ETF (IWB) and the SPDR S&P MIDCAP 400 ETF Trust (MDY) are both among the Top 100 ETFs. IWB is a iShares Large Blend fund and MDY is a SPDR State Street Global Advisors Mid-Cap Blend fund. So, what’s the difference between IWB and MDY? And which fund is better?
The expense ratio of IWB is 0.08 percentage points lower than MDY’s (0.15% vs. 0.23%). IWB also has a higher exposure to the technology sector and a lower standard deviation. Overall, IWB has provided higher returns than MDY over the past ten years.
In this article, we’ll compare IWB vs. MDY. We’ll look at performance and risk metrics, as well as at their industry exposure and fund composition. Moreover, I’ll also discuss IWB’s and MDY’s portfolio growth, annual returns, and holdings and examine how these affect their overall returns.
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|Name||iShares Russell 1000 ETF||SPDR S&P MIDCAP 400 ETF Trust|
|Category||Large Blend||Mid-Cap Blend|
|Issuer||iShares||SPDR State Street Global Advisors|
The iShares Russell 1000 ETF (IWB) is a Large Blend fund that is issued by iShares. It currently has 30.54B total assets under management and has yielded an average annual return of 14.64% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.15%.
The SPDR S&P MIDCAP 400 ETF Trust (MDY) is a Mid-Cap Blend fund that is issued by SPDR State Street Global Advisors. It currently has 21.31B total assets under management and has yielded an average annual return of 13.29% over the past 10 years. The fund has a dividend yield of 0.94% with an expense ratio of 0.23%.
IWB’s dividend yield is 0.20% higher than that of MDY (1.14% vs. 0.94%). Also, IWB yielded on average 1.35% more per year over the past decade (14.64% vs. 13.29%). The expense ratio of IWB is 0.08 percentage points lower than MDY’s (0.15% vs. 0.23%).
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The iShares Russell 1000 ETF (IWB) has the most exposure to the Technology sector at 25.33%. This is followed by Financial Services and Healthcare at 13.64% and 13.35% respectively. Utilities (2.36%), Energy (2.44%), and Real Estate (3.34%) only make up 8.14% of the fund’s total assets.
IWB’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.97%, 8.88%, 10.83%, 11.85%, and 13.35%.
The SPDR S&P MIDCAP 400 ETF Trust (MDY) has the most exposure to the Industrials sector at 17.88%. This is followed by Financial Services and Consumer Cyclical at 15.2% and 14.89% respectively. Energy (2.52%), Utilities (2.84%), and Consumer Defensive (4.2%) only make up 9.56% of the fund’s total assets.
MDY’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Healthcare, Technology, and Consumer Cyclical stocks at 5.27%, 9.66%, 11.17%, 14.74%, and 14.89%.
IWB is 10.59% more exposed to the Technology sector than MDY (25.33% vs 14.74%). IWB’s exposure to Financial Services and Healthcare stocks is 1.56% lower and 2.18% higher respectively (13.64% vs. 15.2% and 13.35% vs. 11.17%). In total, Utilities, Energy, and Real Estate also make up 6.88% less of the fund’s holdings compared to MDY (8.14% vs. 15.02%).
|Facebook Inc Class A||2.03%|
|Alphabet Inc Class A||1.93%|
|Alphabet Inc Class C||1.82%|
|Berkshire Hathaway Inc Class B||1.24%|
|JPMorgan Chase & Co||1.09%|
IWB’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.45%, 5.11%, 3.43%, 2.03%, and 1.93%.
Alphabet Inc Class C (1.82%), Tesla Inc (1.27%), and Berkshire Hathaway Inc Class B (1.24%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the IWB’s holdings at 1.11% and 1.09%.
|Molina Healthcare Inc||0.63%|
|Fair Isaac Corp||0.62%|
|XPO Logistics Inc||0.61%|
|SolarEdge Technologies Inc||0.61%|
|Camden Property Trust||0.55%|
|FactSet Research Systems Inc||0.54%|
MDY’s Top Holdings are Bio-Techne Corp, Molina Healthcare Inc, Cognex Corp, Fair Isaac Corp, and XPO Logistics Inc at 0.75%, 0.63%, 0.63%, 0.62%, and 0.61%.
SolarEdge Technologies Inc (0.61%), Signature Bank (0.6%), and Graco Inc (0.55%) have a slightly smaller but still significant weight. Camden Property Trust and FactSet Research Systems Inc are also represented in the MDY’s holdings at 0.55% and 0.54%.
The iShares Russell 1000 ETF (IWB) has a R-squared of 99.73 with a Standard Deviation of 13.87 and a Mean Return of 1.27. Its Treynor Ratio is 14.31 while IWB’s Alpha is -0.38. Furthermore, the fund has a Sharpe Ratio of 1.05 and a Beta of 1.02.
The SPDR S&P MIDCAP 400 ETF Trust (MDY) has a Alpha of -4.1 with a Standard Deviation of 16.83 and a Treynor Ratio of 9.97. Its Mean Return is 1.08 while MDY’s Sharpe Ratio is 0.73. Furthermore, the fund has a R-squared of 86.66 and a Beta of 1.15.
IWB’s Mean Return is 0.19 points higher than that of MDY and its R-squared is 13.07 points higher. With a Standard Deviation of 13.87, IWB is slightly less volatile than MDY. The Alpha and Beta of IWB are 3.72 points higher and 0.13 points lower than MDY’s Alpha and Beta.
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IWB had its best year in 2013 with an annual return of 32.93%. IWB’s worst year over the past decade yielded -4.91% and occurred in 2018. In most years the iShares Russell 1000 ETF provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.08%, 15.94%, and 16.27% respectively.
The year 2013 was the strongest year for MDY, returning 33.08% on an annual basis. The poorest year for MDY in the last ten years was 2018, with a yield of -11.28%. Most years the SPDR S&P MIDCAP 400 ETF Trust has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 13.51%, 15.89%, and 17.58% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in IWB would have resulted in a final balance of $42,462. This is a profit of $32,462 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.64%.
With a $10,000 investment in MDY, the end total would have been $36,524. This equates to a $26,524 profit over 11 years and a compound annual growth rate (CAGR) of 13.29%.
IWB’s CAGR is 1.35 percentage points higher than that of MDY and as a result, would have yielded $5,938 more on a $10,000 investment. Thus, IWB outperformed MDY by 1.35% annually.
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