MDY vs. XLI: What’s The Difference?

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

The expense ratio of MDY is 0.11 percentage points higher than XLI’s (0.23% vs. 0.12%). MDY also has a lower exposure to the industrials sector and a lower standard deviation. Overall, MDY has provided lower returns than XLI over the past 11 years.

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

Summary

MDY XLI
Name SPDR S&P MIDCAP 400 ETF Trust Industrial Select Sector SPDR Fund
Category Mid-Cap Blend Industrials
Issuer SPDR State Street Global Advisors SPDR State Street Global Advisors
AUM 21.31B 19.33B
Avg. Return 13.29% 14.44%
Div. Yield 0.94% 1.25%
Expense Ratio 0.23% 0.12%

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 Industrial Select Sector SPDR Fund (XLI) is a Industrials fund that is issued by SPDR State Street Global Advisors. It currently has 19.33B total assets under management and has yielded an average annual return of 14.44% over the past 10 years. The fund has a dividend yield of 1.25% with an expense ratio of 0.12%.

MDY’s dividend yield is 0.31% lower than that of XLI (0.94% vs. 1.25%). Also, MDY yielded on average 1.15% less per year over the past decade (13.29% vs. 14.44%). The expense ratio of MDY is 0.11 percentage points higher than XLI’s (0.23% vs. 0.12%).

Fund Composition

Industry Exposure

MDY vs. XLI - Industry Exposure

MDY XLI
Technology 14.74% 1.82%
Industrials 17.88% 97.49%
Energy 2.52% 0.0%
Communication Services 1.63% 0.0%
Utilities 2.84% 0.0%
Healthcare 11.17% 0.0%
Consumer Defensive 4.2% 0.0%
Real Estate 9.66% 0.0%
Financial Services 15.2% 0.0%
Consumer Cyclical 14.89% 0.69%
Basic Materials 5.27% 0.0%

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 Industrial Select Sector SPDR Fund (XLI) has the most exposure to the Industrials sector at 97.49%. This is followed by Technology and Consumer Cyclical at 1.82% and 0.69% respectively. Financial Services (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.

XLI’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Communication Services, Energy, and Consumer Cyclical stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.69%.

MDY is 79.61% less exposed to the Industrials sector than XLI (17.88% vs 97.49%). MDY’s exposure to Financial Services and Consumer Cyclical stocks is 15.20% higher and 14.20% higher respectively (15.2% vs. 0.0% and 14.89% vs. 0.69%). In total, Energy, Utilities, and Consumer Defensive also make up 9.56% more of the fund’s holdings compared to XLI (9.56% vs. 0.00%).

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%.

XLI - Holdings

XLI Holdings Weight
Honeywell International Inc 4.9%
United Parcel Service Inc Class B 4.84%
Union Pacific Corp 4.7%
Boeing Co 4.24%
Raytheon Technologies Corp 4.16%
Caterpillar Inc 3.84%
General Electric Co 3.8%
3M Co 3.7%
Deere & Co 3.54%
Lockheed Martin Corp 2.98%

XLI’s Top Holdings are Honeywell International Inc, United Parcel Service Inc Class B, Union Pacific Corp, Boeing Co, and Raytheon Technologies Corp at 4.9%, 4.84%, 4.7%, 4.24%, and 4.16%.

Caterpillar Inc (3.84%), General Electric Co (3.8%), and 3M Co (3.7%) have a slightly smaller but still significant weight. Deere & Co and Lockheed Martin Corp are also represented in the XLI’s holdings at 3.54% and 2.98%.

Risk Analysis

MDY XLI
Mean Return 1.08 1.14
R-squared 86.66 78.97
Std. Deviation 16.83 17.13
Alpha -4.1 2.38
Beta 1.15 1.08
Sharpe Ratio 0.73 0.76
Treynor Ratio 9.97 11.34

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

The Industrial Select Sector SPDR Fund (XLI) has a Beta of 1.08 with a Sharpe Ratio of 0.76 and a Standard Deviation of 17.13. Its Treynor Ratio is 11.34 while XLI’s Mean Return is 1.14. Furthermore, the fund has a R-squared of 78.97 and a Alpha of 2.38.

MDY’s Mean Return is 0.06 points lower than that of XLI and its R-squared is 7.69 points higher. With a Standard Deviation of 16.83, MDY is slightly less volatile than XLI. The Alpha and Beta of MDY are 6.48 points lower and 0.07 points higher than XLI’s Alpha and Beta.

Performance

Annual Returns

MDY vs. XLI - Annual Returns

Year MDY XLI
2020 13.51% 11.0%
2019 25.86% 29.11%
2018 -11.28% -13.1%
2017 15.89% 23.85%
2016 20.33% 19.93%
2015 -2.4% -4.27%
2014 9.42% 10.44%
2013 33.08% 40.44%
2012 17.58% 14.86%
2011 -1.99% -1.01%
2010 26.17% 27.62%

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 XLI, returning 40.44% on an annual basis. The poorest year for XLI in the last ten years was 2018, with a yield of -13.1%. Most years the Industrial Select Sector SPDR Fund has given investors modest returns, such as in 2020, 2012, and 2016, when gains were 11.0%, 14.86%, and 19.93% respectively.

Portfolio Growth

MDY vs. XLI - Portfolio Growth

Fund Initial Balance Final Balance CAGR
MDY $10,000 $36,524 13.29%
XLI $10,000 $39,853 14.44%

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 XLI, the end total would have been $39,853. This equates to a $29,853 profit over 11 years and a compound annual growth rate (CAGR) of 14.44%.

MDY’s CAGR is 1.15 percentage points lower than that of XLI and as a result, would have yielded $3,329 less on a $10,000 investment. Thus, MDY performed worse than XLI by 1.15% annually.


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