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MDY vs. PFF: What’s The Difference?

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

The expense ratio of MDY is 0.23 percentage points lower than PFF’s (0.23% vs. 0.46%). MDY also has a higher exposure to the industrials sector and a higher standard deviation. Overall, MDY has provided higher returns than PFF over the past 11 years.

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

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Summary

MDYPFF
NameSPDR S&P MIDCAP 400 ETF TrustiShares Preferred and Income Securities ETF
CategoryMid-Cap BlendPreferred Stock
IssuerSPDR State Street Global AdvisorsiShares
AUM21.31B19.8B
Avg. Return13.29%6.90%
Div. Yield0.94%4.47%
Expense Ratio0.23%0.46%

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 Preferred and Income Securities ETF (PFF) is a Preferred Stock fund that is issued by iShares. It currently has 19.8B total assets under management and has yielded an average annual return of 6.90% over the past 10 years. The fund has a dividend yield of 4.47% with an expense ratio of 0.46%.

MDY’s dividend yield is 3.53% lower than that of PFF (0.94% vs. 4.47%). Also, MDY yielded on average 6.39% more per year over the past decade (13.29% vs. 6.90%). The expense ratio of MDY is 0.23 percentage points lower than PFF’s (0.23% vs. 0.46%).

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Fund Composition

Industry Exposure

MDY vs. PFF - Industry Exposure

MDYPFF
Technology14.74%0.0%
Industrials17.88%10.27%
Energy2.52%0.0%
Communication Services1.63%0.0%
Utilities2.84%81.81%
Healthcare11.17%3.54%
Consumer Defensive4.2%0.0%
Real Estate9.66%0.65%
Financial Services15.2%0.0%
Consumer Cyclical14.89%0.0%
Basic Materials5.27%3.74%

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%.

The iShares Preferred and Income Securities ETF (PFF) has the most exposure to the Utilities sector at 81.81%. This is followed by Industrials and Basic Materials at 10.27% and 3.74% respectively. Financial Services (0.0%), Consumer Defensive (0.0%), and Communication Services (0.0%) only make up 0.00% of the fund’s total assets.

PFF’s mid-section with moderate exposure is comprised of Energy, Technology, Real Estate, Healthcare, and Basic Materials stocks at 0.0%, 0.0%, 0.65%, 3.54%, and 3.74%.

MDY is 7.61% more exposed to the Industrials sector than PFF (17.88% vs 10.27%). MDY’s exposure to Financial Services and Consumer Cyclical stocks is 15.20% higher and 14.89% higher respectively (15.2% vs. 0.0% and 14.89% vs. 0.0%). In total, Energy, Utilities, and Consumer Defensive also make up 72.25% less of the fund’s holdings compared to PFF (9.56% vs. 81.81%).

Holdings

MDY - Holdings

MDY HoldingsWeight
Bio-Techne Corp0.75%
Molina Healthcare Inc0.63%
Cognex Corp0.63%
Fair Isaac Corp0.62%
XPO Logistics Inc0.61%
SolarEdge Technologies Inc0.61%
Signature Bank0.6%
Graco Inc0.55%
Camden Property Trust0.55%
FactSet Research Systems Inc0.54%

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%.

PFF - Holdings

PFF HoldingsWeight
Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A2.54%
BlackRock Cash Funds Treasury SL Agency2.3%
Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L-1.79%
Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L-1.49%
ArcelorMittal S.A. 5.5%1.36%
Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A1.35%
Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B1.14%
NextEra Energy Inc Unit1.12%
Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.41.08%
Avantor Inc Ser A0.99%

PFF’s Top Holdings are Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A, BlackRock Cash Funds Treasury SL Agency, Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L-, Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L-, and ArcelorMittal S.A. 5.5% at 2.54%, 2.3%, 1.79%, 1.49%, and 1.36%.

Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A (1.35%), Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B (1.14%), and NextEra Energy Inc Unit (1.12%) have a slightly smaller but still significant weight. Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.4 and Avantor Inc Ser A are also represented in the PFF’s holdings at 1.08% and 0.99%.

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Risk Analysis

MDYPFF
Mean Return1.080.52
R-squared86.669.39
Std. Deviation16.837.87
Alpha-4.13.45
Beta1.150.81
Sharpe Ratio0.730.72
Treynor Ratio9.976.79

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

The iShares Preferred and Income Securities ETF (PFF) has a Standard Deviation of 7.87 with a Mean Return of 0.52 and a Sharpe Ratio of 0.72. Its R-squared is 9.39 while PFF’s Alpha is 3.45. Furthermore, the fund has a Treynor Ratio of 6.79 and a Beta of 0.81.

MDY’s Mean Return is 0.56 points higher than that of PFF and its R-squared is 77.27 points higher. With a Standard Deviation of 16.83, MDY is slightly more volatile than PFF. The Alpha and Beta of MDY are 7.55 points lower and 0.34 points higher than PFF’s Alpha and Beta.

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Performance

Annual Returns

MDY vs. PFF - Annual Returns

YearMDYPFF
202013.51%7.94%
201925.86%15.62%
2018-11.28%-4.77%
201715.89%8.33%
201620.33%1.26%
2015-2.4%4.62%
20149.42%13.45%
201333.08%-0.59%
201217.58%18.25%
2011-1.99%-2.2%
201026.17%13.96%

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 2012 was the strongest year for PFF, returning 18.25% on an annual basis. The poorest year for PFF in the last ten years was 2018, with a yield of -4.77%. Most years the iShares Preferred and Income Securities ETF has given investors modest returns, such as in 2015, 2020, and 2017, when gains were 4.62%, 7.94%, and 8.33% respectively.

Portfolio Growth

MDY vs. PFF - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
MDY$10,000$36,52413.29%
PFF$10,000$20,2726.90%

A $10,000 investment in MDY would have resulted in a final balance of $36,524. This is a profit of $26,524 over 11 years and amounts to a compound annual growth rate (CAGR) of 13.29%.

With a $10,000 investment in PFF, the end total would have been $20,272. This equates to a $10,272 profit over 11 years and a compound annual growth rate (CAGR) of 6.90%.

MDY’s CAGR is 6.39 percentage points higher than that of PFF and as a result, would have yielded $16,252 more on a $10,000 investment. Thus, MDY outperformed PFF by 6.39% annually.


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