The SPDR S&P MIDCAP 400 ETF Trust (MDY) and the iShares U.S. Treasury Bond ETF (GOVT) are both among the Top 100 ETFs. MDY is a SPDR State Street Global Advisors Mid-Cap Blend fund and GOVT is a iShares Intermediate Government fund. So, what’s the difference between MDY and GOVT? And which fund is better?
The expense ratio of MDY is 0.18 percentage points higher than GOVT’s (0.23% vs. 0.05%). MDY also has a high exposure to the industrials sector while GOVT is mostly comprised of AAA bonds. Overall, MDY has provided higher returns than GOVT over the past 8 years.
In this article, we’ll compare MDY vs. GOVT. We’ll look at annual returns and performance, as well as at their holdings and fund composition. Moreover, I’ll also discuss MDY’s and GOVT’s portfolio growth, industry exposure, and risk metrics and examine how these affect their overall returns.
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Summary
| MDY | GOVT | |
| Name | SPDR S&P MIDCAP 400 ETF Trust | iShares U.S. Treasury Bond ETF |
| Category | Mid-Cap Blend | Intermediate Government |
| Issuer | SPDR State Street Global Advisors | iShares |
| AUM | 21.31B | 17.07B |
| Avg. Return | 13.29% | 2.67% |
| Div. Yield | 0.94% | 1.0% |
| Expense Ratio | 0.23% | 0.05% |
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%.
The iShares U.S. Treasury Bond ETF (GOVT) is a Intermediate Government fund that is issued by iShares. It currently has 17.07B total assets under management and has yielded an average annual return of 2.67% over the past 10 years. The fund has a dividend yield of 1.0% with an expense ratio of 0.05%.
MDY’s dividend yield is 0.06% lower than that of GOVT (0.94% vs. 1.0%). Also, MDY yielded on average 10.61% more per year over the past decade (13.29% vs. 2.67%). The expense ratio of MDY is 0.18 percentage points higher than GOVT’s (0.23% vs. 0.05%).
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Fund Composition
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%.
| GOVT Bond Sectors | Weight |
| AAA | 100.0% |
| Others | 0.0% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
GOVT’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 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.
Risk Analysis
| MDY | GOVT | |
| Mean Return | 1.08 | 0 |
| R-squared | 86.66 | 0 |
| Std. Deviation | 16.83 | 0 |
| Alpha | -4.1 | 0 |
| Beta | 1.15 | 0 |
| Sharpe Ratio | 0.73 | 0 |
| Treynor Ratio | 9.97 | 0 |
The SPDR S&P MIDCAP 400 ETF Trust (MDY) has a Treynor Ratio of 9.97 with a Mean Return of 1.08 and a R-squared of 86.66. Its Alpha is -4.1 while MDY’s Standard Deviation is 16.83. Furthermore, the fund has a Sharpe Ratio of 0.73 and a Beta of 1.15.
The iShares U.S. Treasury Bond ETF (GOVT) has a Sharpe Ratio of 0 with a Mean Return of 0 and a Standard Deviation of 0. Its Alpha is 0 while GOVT’s Treynor Ratio is 0. Furthermore, the fund has a Beta of 0 and a R-squared of 0.
MDY’s Mean Return is 1.08 points higher than that of GOVT and its R-squared is 86.66 points higher. With a Standard Deviation of 16.83, MDY is slightly more volatile than GOVT. The Alpha and Beta of MDY are 4.10 points lower and 1.15 points higher than GOVT’s Alpha and Beta.
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Performance
Annual Returns
| Year | MDY | GOVT |
| 2020 | 13.51% | 7.92% |
| 2019 | 25.86% | 6.71% |
| 2018 | -11.28% | 0.74% |
| 2017 | 15.89% | 2.19% |
| 2016 | 20.33% | 0.92% |
| 2015 | -2.4% | 0.76% |
| 2014 | 9.42% | 4.99% |
| 2013 | 33.08% | -2.84% |
| 2012 | 17.58% | 0.0% |
| 2011 | -1.99% | 0.0% |
| 2010 | 26.17% | 0.0% |
MDY had its best year in 2013 with an annual return of 33.08%. MDY’s worst year over the past decade yielded -11.28% and occurred in 2018. In most years the SPDR S&P MIDCAP 400 ETF Trust provided moderate returns such as in 2020, 2017, and 2012 where annual returns amounted to 13.51%, 15.89%, and 17.58% respectively.
The year 2020 was the strongest year for GOVT, returning 7.92% on an annual basis. The poorest year for GOVT in the last ten years was 2013, with a yield of -2.84%. Most years the iShares U.S. Treasury Bond ETF has given investors modest returns, such as in 2018, 2015, and 2016, when gains were 0.74%, 0.76%, and 0.92% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| MDY | $10,000 | $25,120 | 13.29% |
| GOVT | $10,000 | $12,297 | 2.67% |
A $10,000 investment in MDY would have resulted in a final balance of $25,120. This is a profit of $15,120 over 8 years and amounts to a compound annual growth rate (CAGR) of 13.29%.
With a $10,000 investment in GOVT, the end total would have been $12,297. This equates to a $2,297 profit over 8 years and a compound annual growth rate (CAGR) of 2.67%.
MDY’s CAGR is 10.61 percentage points higher than that of GOVT and as a result, would have yielded $12,823 more on a $10,000 investment. Thus, MDY outperformed GOVT by 10.61% annually.
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