IWD vs. MDY: What’s The Difference?

The iShares Russell 1000 Value ETF (IWD) and the SPDR S&P MIDCAP 400 ETF Trust (MDY) are both among the Top 100 ETFs. IWD is a iShares Large Value fund and MDY is a SPDR State Street Global Advisors Mid-Cap Blend fund. So, what’s the difference between IWD and MDY? And which fund is better?

The expense ratio of IWD is 0.04 percentage points lower than MDY’s (0.19% vs. 0.23%). IWD also has a higher exposure to the financial services sector and a lower standard deviation. Overall, IWD has provided lower returns than MDY over the past ten years.

In this article, we’ll compare IWD vs. MDY. We’ll look at fund composition and annual returns, as well as at their holdings and portfolio growth. Moreover, I’ll also discuss IWD’s and MDY’s risk metrics, industry exposure, and performance and examine how these affect their overall returns.

Summary

IWD MDY
Name iShares Russell 1000 Value ETF SPDR S&P MIDCAP 400 ETF Trust
Category Large Value Mid-Cap Blend
Issuer iShares SPDR State Street Global Advisors
AUM 54.1B 21.31B
Avg. Return 11.40% 13.29%
Div. Yield 1.57% 0.94%
Expense Ratio 0.19% 0.23%

The iShares Russell 1000 Value ETF (IWD) is a Large Value fund that is issued by iShares. It currently has 54.1B total assets under management and has yielded an average annual return of 11.40% over the past 10 years. The fund has a dividend yield of 1.57% with an expense ratio of 0.19%.

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%.

IWD’s dividend yield is 0.63% higher than that of MDY (1.57% vs. 0.94%). Also, IWD yielded on average 1.89% less per year over the past decade (11.40% vs. 13.29%). The expense ratio of IWD is 0.04 percentage points lower than MDY’s (0.19% vs. 0.23%).

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Fund Composition

Industry Exposure

IWD vs. MDY - Industry Exposure

IWD MDY
Technology 10.28% 14.74%
Industrials 11.77% 17.88%
Energy 4.76% 2.52%
Communication Services 8.67% 1.63%
Utilities 4.88% 2.84%
Healthcare 17.78% 11.17%
Consumer Defensive 7.76% 4.2%
Real Estate 4.94% 9.66%
Financial Services 20.43% 15.2%
Consumer Cyclical 5.62% 14.89%
Basic Materials 3.1% 5.27%

The iShares Russell 1000 Value ETF (IWD) has the most exposure to the Financial Services sector at 20.43%. This is followed by Healthcare and Industrials at 17.78% and 11.77% respectively. Energy (4.76%), Utilities (4.88%), and Real Estate (4.94%) only make up 14.58% of the fund’s total assets.

IWD’s mid-section with moderate exposure is comprised of Consumer Cyclical, Consumer Defensive, Communication Services, Technology, and Industrials stocks at 5.62%, 7.76%, 8.67%, 10.28%, and 11.77%.

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%.

IWD is 5.23% more exposed to the Financial Services sector than MDY (20.43% vs 15.2%). IWD’s exposure to Healthcare and Industrials stocks is 6.61% higher and 6.11% lower respectively (17.78% vs. 11.17% and 11.77% vs. 17.88%). In total, Energy, Utilities, and Real Estate also make up 0.44% less of the fund’s holdings compared to MDY (14.58% vs. 15.02%).

Holdings

IWD - Holdings

IWD Holdings Weight
Berkshire Hathaway Inc Class B 2.58%
JPMorgan Chase & Co 2.25%
Johnson & Johnson 2.24%
UnitedHealth Group Inc 1.78%
Procter & Gamble Co 1.71%
The Walt Disney Co 1.5%
Bank of America Corp 1.43%
Comcast Corp Class A 1.33%
Exxon Mobil Corp 1.2%
Pfizer Inc 1.18%

IWD’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Johnson & Johnson, UnitedHealth Group Inc, and Procter & Gamble Co at 2.58%, 2.25%, 2.24%, 1.78%, and 1.71%.

The Walt Disney Co (1.5%), Bank of America Corp (1.43%), and Comcast Corp Class A (1.33%) have a slightly smaller but still significant weight. Exxon Mobil Corp and Pfizer Inc are also represented in the IWD’s holdings at 1.2% and 1.18%.

MDY - Holdings

MDY Holdings Weight
Bio-Techne Corp 0.75%
Molina Healthcare Inc 0.63%
Cognex Corp 0.63%
Fair Isaac Corp 0.62%
XPO Logistics Inc 0.61%
SolarEdge Technologies Inc 0.61%
Signature Bank 0.6%
Graco Inc 0.55%
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%.

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Risk Analysis

IWD MDY
Mean Return 1.03 1.08
R-squared 92.38 86.66
Std. Deviation 14.35 16.83
Alpha -3.23 -4.1
Beta 1.02 1.15
Sharpe Ratio 0.81 0.73
Treynor Ratio 11.06 9.97

The iShares Russell 1000 Value ETF (IWD) has a Alpha of -3.23 with a Beta of 1.02 and a Standard Deviation of 14.35. Its Sharpe Ratio is 0.81 while IWD’s Mean Return is 1.03. Furthermore, the fund has a Treynor Ratio of 11.06 and a R-squared of 92.38.

The SPDR S&P MIDCAP 400 ETF Trust (MDY) has a Beta of 1.15 with a Sharpe Ratio of 0.73 and a Alpha of -4.1. Its Standard Deviation is 16.83 while MDY’s Treynor Ratio is 9.97. Furthermore, the fund has a Mean Return of 1.08 and a R-squared of 86.66.

IWD’s Mean Return is 0.05 points lower than that of MDY and its R-squared is 5.72 points higher. With a Standard Deviation of 14.35, IWD is slightly less volatile than MDY. The Alpha and Beta of IWD are 0.87 points higher and 0.13 points lower than MDY’s Alpha and Beta.

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Performance

Annual Returns

IWD vs. MDY - Annual Returns

Year IWD MDY
2020 2.67% 13.51%
2019 26.34% 25.86%
2018 -8.4% -11.28%
2017 13.47% 15.89%
2016 17.09% 20.33%
2015 -3.95% -2.4%
2014 13.21% 9.42%
2013 32.18% 33.08%
2012 17.28% 17.58%
2011 0.21% -1.99%
2010 15.3% 26.17%

IWD had its best year in 2013 with an annual return of 32.18%. IWD’s worst year over the past decade yielded -8.4% and occurred in 2018. In most years the iShares Russell 1000 Value ETF provided moderate returns such as in 2014, 2017, and 2010 where annual returns amounted to 13.21%, 13.47%, and 15.3% 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.

Portfolio Growth

IWD vs. MDY - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWD $10,000 $30,746 11.40%
MDY $10,000 $36,524 13.29%

A $10,000 investment in IWD would have resulted in a final balance of $30,746. This is a profit of $20,746 over 11 years and amounts to a compound annual growth rate (CAGR) of 11.40%.

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%.

IWD’s CAGR is 1.89 percentage points lower than that of MDY and as a result, would have yielded $5,778 less on a $10,000 investment. Thus, IWD performed worse than MDY by 1.89% annually.


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