MDY vs. VBK: What’s The Difference?

The SPDR S&P MIDCAP 400 ETF Trust (MDY) and the Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) are both among the Top 100 ETFs. MDY is a SPDR State Street Global Advisors Mid-Cap Blend fund and VBK is a Vanguard Small Growth fund. So, what’s the difference between MDY and VBK? And which fund is better?

The expense ratio of MDY is 0.16 percentage points higher than VBK’s (0.23% vs. 0.07%). MDY also has a higher exposure to the industrials sector and a lower standard deviation. Overall, MDY has provided lower returns than VBK over the past 11 years.

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

Summary

MDY VBK
Name SPDR S&P MIDCAP 400 ETF Trust Vanguard Small-Cap Growth Index Fund ETF Shares
Category Mid-Cap Blend Small Growth
Issuer SPDR State Street Global Advisors Vanguard
AUM 21.31B 37.89B
Avg. Return 13.29% 16.53%
Div. Yield 0.94% 0.45%
Expense Ratio 0.23% 0.07%

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 Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) is a Small Growth fund that is issued by Vanguard. It currently has 37.89B total assets under management and has yielded an average annual return of 16.53% over the past 10 years. The fund has a dividend yield of 0.45% with an expense ratio of 0.07%.

MDY’s dividend yield is 0.49% higher than that of VBK (0.94% vs. 0.45%). Also, MDY yielded on average 3.24% less per year over the past decade (13.29% vs. 16.53%). The expense ratio of MDY is 0.16 percentage points higher than VBK’s (0.23% vs. 0.07%).

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Fund Composition

Industry Exposure

MDY vs. VBK - Industry Exposure

MDY VBK
Technology 14.74% 27.87%
Industrials 17.88% 13.19%
Energy 2.52% 1.77%
Communication Services 1.63% 3.24%
Utilities 2.84% 0.32%
Healthcare 11.17% 23.24%
Consumer Defensive 4.2% 3.83%
Real Estate 9.66% 7.87%
Financial Services 15.2% 4.05%
Consumer Cyclical 14.89% 12.13%
Basic Materials 5.27% 2.49%

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 Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has the most exposure to the Technology sector at 27.87%. This is followed by Healthcare and Industrials at 23.24% and 13.19% respectively. Energy (1.77%), Basic Materials (2.49%), and Communication Services (3.24%) only make up 7.50% of the fund’s total assets.

VBK’s mid-section with moderate exposure is comprised of Consumer Defensive, Financial Services, Real Estate, Consumer Cyclical, and Industrials stocks at 3.83%, 4.05%, 7.87%, 12.13%, and 13.19%.

MDY is 4.69% more exposed to the Industrials sector than VBK (17.88% vs 13.19%). MDY’s exposure to Financial Services and Consumer Cyclical stocks is 11.15% higher and 2.76% higher respectively (15.2% vs. 4.05% and 14.89% vs. 12.13%). In total, Energy, Utilities, and Consumer Defensive also make up 3.64% more of the fund’s holdings compared to VBK (9.56% vs. 5.92%).

Holdings

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%.

VBK - Holdings

VBK Holdings Weight
Charles River Laboratories International Inc 0.78%
Pool Corp 0.73%
Bio-Techne Corp 0.73%
Avantor Inc 0.73%
PerkinElmer Inc 0.72%
Entegris Inc 0.7%
PTC Inc 0.62%
Fair Isaac Corp 0.57%
Bill.com Holdings Inc Ordinary Shares 0.56%
Avalara Inc 0.55%

VBK’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.78%, 0.73%, 0.73%, 0.73%, and 0.72%.

Entegris Inc (0.7%), PTC Inc (0.62%), and Fair Isaac Corp (0.57%) have a slightly smaller but still significant weight. Bill.com Holdings Inc Ordinary Shares and Avalara Inc are also represented in the VBK’s holdings at 0.56% and 0.55%.

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Risk Analysis

MDY VBK
Mean Return 1.08 1.22
R-squared 86.66 80.56
Std. Deviation 16.83 17.95
Alpha -4.1 -2.81
Beta 1.15 1.18
Sharpe Ratio 0.73 0.78
Treynor Ratio 9.97 11.18

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

The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a Standard Deviation of 17.95 with a Alpha of -2.81 and a Treynor Ratio of 11.18. Its Mean Return is 1.22 while VBK’s R-squared is 80.56. Furthermore, the fund has a Beta of 1.18 and a Sharpe Ratio of 0.78.

MDY’s Mean Return is 0.14 points lower than that of VBK and its R-squared is 6.10 points higher. With a Standard Deviation of 16.83, MDY is slightly less volatile than VBK. The Alpha and Beta of MDY are 1.29 points lower and 0.03 points lower than VBK’s Alpha and Beta.

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Performance

Annual Returns

MDY vs. VBK - Annual Returns

Year MDY VBK
2020 13.51% 35.29%
2019 25.86% 32.75%
2018 -11.28% -5.68%
2017 15.89% 21.9%
2016 20.33% 10.74%
2015 -2.4% -2.51%
2014 9.42% 4.02%
2013 33.08% 38.18%
2012 17.58% 17.67%
2011 -1.99% -1.43%
2010 26.17% 30.87%

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 2013 was the strongest year for VBK, returning 38.18% on an annual basis. The poorest year for VBK in the last ten years was 2018, with a yield of -5.68%. Most years the Vanguard Small-Cap Growth Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2017, when gains were 10.74%, 17.67%, and 21.9% respectively.

Portfolio Growth

MDY vs. VBK - Portfolio Growth

Fund Initial Balance Final Balance CAGR
MDY $10,000 $36,524 13.29%
VBK $10,000 $48,639 16.53%

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 VBK, the end total would have been $48,639. This equates to a $38,639 profit over 11 years and a compound annual growth rate (CAGR) of 16.53%.

MDY’s CAGR is 3.24 percentage points lower than that of VBK and as a result, would have yielded $12,115 less on a $10,000 investment. Thus, MDY performed worse than VBK by 3.24% annually.


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