The SPDR S&P MIDCAP 400 ETF Trust (MDY) and the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) are both among the Top 100 ETFs. MDY is a SPDR State Street Global Advisors Mid-Cap Blend fund and VTIP is a Vanguard Inflation-Protected Bond fund. So, what’s the difference between MDY and VTIP? And which fund is better?
The expense ratio of MDY is 0.18 percentage points higher than VTIP’s (0.23% vs. 0.05%). MDY also has a high exposure to the industrials sector while VTIP is mostly comprised of AAA bonds. Overall, MDY has provided higher returns than VTIP over the past 7 years.
In this article, we’ll compare MDY vs. VTIP. We’ll look at fund composition and portfolio growth, as well as at their holdings and performance. Moreover, I’ll also discuss MDY’s and VTIP’s annual returns, industry exposure, and risk metrics and examine how these affect their overall returns.
Summary
| MDY | VTIP | |
| Name | SPDR S&P MIDCAP 400 ETF Trust | Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares |
| Category | Mid-Cap Blend | Inflation-Protected Bond |
| Issuer | SPDR State Street Global Advisors | Vanguard |
| AUM | 21.31B | 50.67B |
| Avg. Return | 13.29% | 1.79% |
| Div. Yield | 0.94% | 1.35% |
| 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 Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) is a Inflation-Protected Bond fund that is issued by Vanguard. It currently has 50.67B total assets under management and has yielded an average annual return of 1.79% over the past 10 years. The fund has a dividend yield of 1.35% with an expense ratio of 0.05%.
MDY’s dividend yield is 0.41% lower than that of VTIP (0.94% vs. 1.35%). Also, MDY yielded on average 11.50% more per year over the past decade (13.29% vs. 1.79%). The expense ratio of MDY is 0.18 percentage points higher than VTIP’s (0.23% vs. 0.05%).
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%.
| VTIP Bond Sectors | Weight |
| AAA | 99.87% |
| Others | 0.13% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
VTIP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.87%, 0.13%, 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 | VTIP | |
| 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 Mean Return of 1.08 with a R-squared of 86.66 and a Beta of 1.15. Its Treynor Ratio is 9.97 while MDY’s Sharpe Ratio is 0.73. Furthermore, the fund has a Alpha of -4.1 and a Standard Deviation of 16.83.
The Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) has a Treynor Ratio of 0 with a Beta of 0 and a R-squared of 0. Its Sharpe Ratio is 0 while VTIP’s Mean Return is 0. Furthermore, the fund has a Alpha of 0 and a Standard Deviation of 0.
MDY’s Mean Return is 1.08 points higher than that of VTIP and its R-squared is 86.66 points higher. With a Standard Deviation of 16.83, MDY is slightly more volatile than VTIP. The Alpha and Beta of MDY are 4.10 points lower and 1.15 points higher than VTIP’s Alpha and Beta.
Performance
Annual Returns
| Year | MDY | VTIP |
| 2020 | 13.51% | 4.97% |
| 2019 | 25.86% | 4.83% |
| 2018 | -11.28% | 0.54% |
| 2017 | 15.89% | 0.82% |
| 2016 | 20.33% | 2.71% |
| 2015 | -2.4% | -0.15% |
| 2014 | 9.42% | -1.17% |
| 2013 | 33.08% | -1.55% |
| 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 VTIP, returning 4.97% on an annual basis. The poorest year for VTIP in the last ten years was 2013, with a yield of -1.55%. Most years the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares has given investors modest returns, such as in 2011, 2010, and 2018, when gains were 0.0%, 0.0%, and 0.54% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| MDY | $10,000 | $18,875 | 13.29% |
| VTIP | $10,000 | $11,305 | 1.79% |
A $10,000 investment in MDY would have resulted in a final balance of $18,875. This is a profit of $8,875 over 7 years and amounts to a compound annual growth rate (CAGR) of 13.29%.
With a $10,000 investment in VTIP, the end total would have been $11,305. This equates to a $1,305 profit over 7 years and a compound annual growth rate (CAGR) of 1.79%.
MDY’s CAGR is 11.50 percentage points higher than that of VTIP and as a result, would have yielded $7,570 more on a $10,000 investment. Thus, MDY outperformed VTIP by 11.50% annually.
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