The iShares MBS ETF (MBB) and the SPDR S&P MIDCAP 400 ETF Trust (MDY) are both among the Top 100 ETFs. MBB is a iShares Intermediate Government fund and MDY is a SPDR State Street Global Advisors Mid-Cap Blend fund. So, what’s the difference between MBB and MDY? And which fund is better?
The expense ratio of MBB is 0.17 percentage points lower than MDY’s (0.06% vs. 0.23%). MBB is mostly comprised of AAA bonds while MDY has a high exposure to the industrials sector. Overall, MBB has provided lower returns than MDY over the past 11 years.
In this article, we’ll compare MBB vs. MDY. We’ll look at holdings and annual returns, as well as at their risk metrics and industry exposure. Moreover, I’ll also discuss MBB’s and MDY’s portfolio growth, performance, and fund composition and examine how these affect their overall returns.
Summary
| MBB | MDY | |
| Name | iShares MBS ETF | SPDR S&P MIDCAP 400 ETF Trust |
| Category | Intermediate Government | Mid-Cap Blend |
| Issuer | iShares | SPDR State Street Global Advisors |
| AUM | 25.69B | 21.31B |
| Avg. Return | 3.08% | 13.29% |
| Div. Yield | 1.88% | 0.94% |
| Expense Ratio | 0.06% | 0.23% |
The iShares MBS ETF (MBB) is a Intermediate Government fund that is issued by iShares. It currently has 25.69B total assets under management and has yielded an average annual return of 3.08% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.06%.
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%.
MBB’s dividend yield is 0.94% higher than that of MDY (1.88% vs. 0.94%). Also, MBB yielded on average 10.21% less per year over the past decade (3.08% vs. 13.29%). The expense ratio of MBB is 0.17 percentage points lower than MDY’s (0.06% vs. 0.23%).
Fund Composition
Holdings
| MBB Bond Sectors | Weight |
| AAA | 99.51% |
| Others | 0.49% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
MBB’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.51%, 0.49%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
| 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%.
Risk Analysis
| MBB | MDY | |
| Mean Return | 0.2 | 1.08 |
| R-squared | 74.38 | 86.66 |
| Std. Deviation | 2.12 | 16.83 |
| Alpha | 0.14 | -4.1 |
| Beta | 0.6 | 1.15 |
| Sharpe Ratio | 0.87 | 0.73 |
| Treynor Ratio | 3.02 | 9.97 |
The iShares MBS ETF (MBB) has a Sharpe Ratio of 0.87 with a R-squared of 74.38 and a Treynor Ratio of 3.02. Its Mean Return is 0.2 while MBB’s Alpha is 0.14. Furthermore, the fund has a Standard Deviation of 2.12 and a Beta of 0.6.
The SPDR S&P MIDCAP 400 ETF Trust (MDY) has a Mean Return of 1.08 with a Treynor Ratio of 9.97 and a Sharpe Ratio of 0.73. Its Alpha is -4.1 while MDY’s Beta is 1.15. Furthermore, the fund has a Standard Deviation of 16.83 and a R-squared of 86.66.
MBB’s Mean Return is 0.88 points lower than that of MDY and its R-squared is 12.28 points lower. With a Standard Deviation of 2.12, MBB is slightly less volatile than MDY. The Alpha and Beta of MBB are 4.24 points higher and 0.55 points lower than MDY’s Alpha and Beta.
Performance
Annual Returns
| Year | MBB | MDY |
| 2020 | 4.03% | 13.51% |
| 2019 | 6.27% | 25.86% |
| 2018 | 0.81% | -11.28% |
| 2017 | 2.37% | 15.89% |
| 2016 | 1.28% | 20.33% |
| 2015 | 1.28% | -2.4% |
| 2014 | 6.16% | 9.42% |
| 2013 | -1.92% | 33.08% |
| 2012 | 2.23% | 17.58% |
| 2011 | 5.88% | -1.99% |
| 2010 | 5.44% | 26.17% |
MBB had its best year in 2019 with an annual return of 6.27%. MBB’s worst year over the past decade yielded -1.92% and occurred in 2013. In most years the iShares MBS ETF provided moderate returns such as in 2012, 2017, and 2020 where annual returns amounted to 2.23%, 2.37%, and 4.03% 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
| Fund | Initial Balance | Final Balance | CAGR |
| MBB | $10,000 | $13,906 | 3.08% |
| MDY | $10,000 | $36,524 | 13.29% |
A $10,000 investment in MBB would have resulted in a final balance of $13,906. This is a profit of $3,906 over 11 years and amounts to a compound annual growth rate (CAGR) of 3.08%.
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%.
MBB’s CAGR is 10.21 percentage points lower than that of MDY and as a result, would have yielded $22,618 less on a $10,000 investment. Thus, MBB performed worse than MDY by 10.21% annually.
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