The iShares Russell 2000 ETF (IWM) and the SPDR S&P MIDCAP 400 ETF Trust (MDY) are both among the Top 100 ETFs. IWM is a iShares Small Blend fund and MDY is a SPDR State Street Global Advisors Mid-Cap Blend fund. So, what’s the difference between IWM and MDY? And which fund is better?
The expense ratio of IWM is 0.04 percentage points lower than MDY’s (0.19% vs. 0.23%). IWM also has a higher exposure to the healthcare sector and a higher standard deviation. Overall, IWM has provided higher returns than MDY over the past ten years.
In this article, we’ll compare IWM vs. MDY. We’ll look at industry exposure and portfolio growth, as well as at their holdings and performance. Moreover, I’ll also discuss IWM’s and MDY’s annual returns, fund composition, and risk metrics and examine how these affect their overall returns.
|Name||iShares Russell 2000 ETF||SPDR S&P MIDCAP 400 ETF Trust|
|Category||Small Blend||Mid-Cap Blend|
|Issuer||iShares||SPDR State Street Global Advisors|
The iShares Russell 2000 ETF (IWM) is a Small Blend fund that is issued by iShares. It currently has 66.48B total assets under management and has yielded an average annual return of 13.52% over the past 10 years. The fund has a dividend yield of 0.86% 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%.
IWM’s dividend yield is 0.08% lower than that of MDY (0.86% vs. 0.94%). Also, IWM yielded on average 0.23% more per year over the past decade (13.52% vs. 13.29%). The expense ratio of IWM is 0.04 percentage points lower than MDY’s (0.19% vs. 0.23%).
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The iShares Russell 2000 ETF (IWM) has the most exposure to the Healthcare sector at 20.3%. This is followed by Industrials and Technology at 14.78% and 14.21% respectively. Consumer Defensive (3.65%), Basic Materials (3.74%), and Energy (3.74%) only make up 11.13% of the fund’s total assets.
IWM’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Consumer Cyclical, Financial Services, and Technology stocks at 3.79%, 8.59%, 10.99%, 13.76%, and 14.21%.
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%.
IWM is 9.13% more exposed to the Healthcare sector than MDY (20.3% vs 11.17%). IWM’s exposure to Industrials and Technology stocks is 3.10% lower and 0.53% lower respectively (14.78% vs. 17.88% and 14.21% vs. 14.74%). In total, Consumer Defensive, Basic Materials, and Energy also make up 0.86% less of the fund’s holdings compared to MDY (11.13% vs. 11.99%).
|AMC Entertainment Holdings Inc Class A||0.52%|
|Intellia Therapeutics Inc||0.33%|
|BlackRock Cash Funds Treasury SL Agency||0.29%|
|Tenet Healthcare Corp||0.26%|
|Lattice Semiconductor Corp||0.26%|
|Tetra Tech Inc||0.25%|
|EastGroup Properties Inc||0.24%|
|Arrowhead Pharmaceuticals Inc||0.24%|
IWM’s Top Holdings are AMC Entertainment Holdings Inc Class A, Intellia Therapeutics Inc, Crocs Inc, BlackRock Cash Funds Treasury SL Agency, and Tenet Healthcare Corp at 0.52%, 0.33%, 0.3%, 0.29%, and 0.26%.
Lattice Semiconductor Corp (0.26%), Tetra Tech Inc (0.25%), and II-VI Inc (0.25%) have a slightly smaller but still significant weight. EastGroup Properties Inc and Arrowhead Pharmaceuticals Inc are also represented in the IWM’s holdings at 0.24% and 0.24%.
|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%.
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The iShares Russell 2000 ETF (IWM) has a Treynor Ratio of 9.56 with a R-squared of 77.73 and a Alpha of -5.12. Its Sharpe Ratio is 0.68 while IWM’s Standard Deviation is 18.87. Furthermore, the fund has a Beta of 1.23 and a Mean Return of 1.12.
The SPDR S&P MIDCAP 400 ETF Trust (MDY) has a Alpha of -4.1 with a Standard Deviation of 16.83 and a Sharpe Ratio of 0.73. Its Beta is 1.15 while MDY’s R-squared is 86.66. Furthermore, the fund has a Mean Return of 1.08 and a Treynor Ratio of 9.97.
IWM’s Mean Return is 0.04 points higher than that of MDY and its R-squared is 8.93 points lower. With a Standard Deviation of 18.87, IWM is slightly more volatile than MDY. The Alpha and Beta of IWM are 1.02 points lower and 0.08 points higher than MDY’s Alpha and Beta.
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IWM had its best year in 2013 with an annual return of 38.85%. IWM’s worst year over the past decade yielded -11.02% and occurred in 2018. In most years the iShares Russell 2000 ETF provided moderate returns such as in 2017, 2012, and 2020 where annual returns amounted to 14.66%, 16.39%, and 19.89% 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 IWM would have resulted in a final balance of $36,686. This is a profit of $26,686 over 11 years and amounts to a compound annual growth rate (CAGR) of 13.52%.
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%.
IWM’s CAGR is 0.23 percentage points higher than that of MDY and as a result, would have yielded $162 more on a $10,000 investment. Thus, IWM outperformed MDY by 0.23% annually.
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