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USMV vs. MDY: What’s The Difference?

The iShares MSCI USA Min Vol Factor ETF (USMV) and the SPDR S&P MIDCAP 400 ETF Trust (MDY) are both among the Top 100 ETFs. USMV is a iShares Large Blend fund and MDY is a SPDR State Street Global Advisors Mid-Cap Blend fund. So, what’s the difference between USMV and MDY? And which fund is better?

The expense ratio of USMV is 0.08 percentage points lower than MDY’s (0.15% vs. 0.23%). USMV also has a higher exposure to the technology sector and a lower standard deviation. Overall, USMV has provided higher returns than MDY over the past 8 years.

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

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Summary

USMVMDY
NameiShares MSCI USA Min Vol Factor ETFSPDR S&P MIDCAP 400 ETF Trust
CategoryLarge BlendMid-Cap Blend
IssueriSharesSPDR State Street Global Advisors
AUM27.6B21.31B
Avg. Return13.89%13.29%
Div. Yield1.5%0.94%
Expense Ratio0.15%0.23%

The iShares MSCI USA Min Vol Factor ETF (USMV) is a Large Blend fund that is issued by iShares. It currently has 27.6B total assets under management and has yielded an average annual return of 13.89% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.

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%.

USMV’s dividend yield is 0.56% higher than that of MDY (1.5% vs. 0.94%). Also, USMV yielded on average 0.61% more per year over the past decade (13.89% vs. 13.29%). The expense ratio of USMV is 0.08 percentage points lower than MDY’s (0.15% vs. 0.23%).

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Fund Composition

Industry Exposure

USMV vs. MDY - Industry Exposure

USMVMDY
Technology20.53%14.74%
Industrials10.51%17.88%
Energy0.21%2.52%
Communication Services11.03%1.63%
Utilities6.93%2.84%
Healthcare18.42%11.17%
Consumer Defensive12.82%4.2%
Real Estate2.73%9.66%
Financial Services9.65%15.2%
Consumer Cyclical5.53%14.89%
Basic Materials1.65%5.27%

The iShares MSCI USA Min Vol Factor ETF (USMV) has the most exposure to the Technology sector at 20.53%. This is followed by Healthcare and Consumer Defensive at 18.42% and 12.82% respectively. Basic Materials (1.65%), Real Estate (2.73%), and Consumer Cyclical (5.53%) only make up 9.91% of the fund’s total assets.

USMV’s mid-section with moderate exposure is comprised of Utilities, Financial Services, Industrials, Communication Services, and Consumer Defensive stocks at 6.93%, 9.65%, 10.51%, 11.03%, and 12.82%.

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%.

USMV is 5.79% more exposed to the Technology sector than MDY (20.53% vs 14.74%). USMV’s exposure to Healthcare and Consumer Defensive stocks is 7.25% higher and 8.62% higher respectively (18.42% vs. 11.17% and 12.82% vs. 4.2%). In total, Basic Materials, Real Estate, and Consumer Cyclical also make up 19.91% less of the fund’s holdings compared to MDY (9.91% vs. 29.82%).

Holdings

USMV - Holdings

USMV HoldingsWeight
Eli Lilly and Co1.64%
Microsoft Corp1.62%
T-Mobile US Inc1.51%
Accenture PLC Class A1.51%
Visa Inc Class A1.49%
Waste Management Inc1.45%
Adobe Inc1.45%
The Kroger Co1.44%
Johnson & Johnson1.42%
Gilead Sciences Inc1.42%

USMV’s Top Holdings are Eli Lilly and Co, Microsoft Corp, T-Mobile US Inc, Accenture PLC Class A, and Visa Inc Class A at 1.64%, 1.62%, 1.51%, 1.51%, and 1.49%.

Waste Management Inc (1.45%), Adobe Inc (1.45%), and The Kroger Co (1.44%) have a slightly smaller but still significant weight. Johnson & Johnson and Gilead Sciences Inc are also represented in the USMV’s holdings at 1.42% and 1.42%.

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%.

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Risk Analysis

USMVMDY
Mean Return01.08
R-squared086.66
Std. Deviation016.83
Alpha0-4.1
Beta01.15
Sharpe Ratio00.73
Treynor Ratio09.97

The iShares MSCI USA Min Vol Factor ETF (USMV) has a Mean Return of 0 with a Alpha of 0 and a Sharpe Ratio of 0. Its Beta is 0 while USMV’s Standard Deviation is 0. Furthermore, the fund has a R-squared of 0 and a Treynor Ratio of 0.

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

USMV’s Mean Return is 1.08 points lower than that of MDY and its R-squared is 86.66 points lower. With a Standard Deviation of 0, USMV is slightly less volatile than MDY. The Alpha and Beta of USMV are 4.10 points higher and 1.15 points lower than MDY’s Alpha and Beta.

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Performance

Annual Returns

USMV vs. MDY - Annual Returns

YearUSMVMDY
20205.6%13.51%
201927.77%25.86%
20181.36%-11.28%
201718.97%15.89%
201610.5%20.33%
20155.5%-2.4%
201416.34%9.42%
201325.11%33.08%
201211.04%17.58%
20110.0%-1.99%
20100.0%26.17%

USMV had its best year in 2019 with an annual return of 27.77%. USMV’s worst year over the past decade yielded 0.0% and occurred in 2011. In most years the iShares MSCI USA Min Vol Factor ETF provided moderate returns such as in 2020, 2016, and 2012 where annual returns amounted to 5.6%, 10.5%, and 11.04% respectively.

The year 2013 was the strongest year for MDY, returning 33.08% on an annual basis. The poorest year for MDY in the last ten years was 2018, with a yield of -11.28%. Most years the SPDR S&P MIDCAP 400 ETF Trust has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 13.51%, 15.89%, and 17.58% respectively.

Portfolio Growth

USMV vs. MDY - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
USMV$10,000$27,60713.89%
MDY$10,000$25,12013.29%

A $10,000 investment in USMV would have resulted in a final balance of $27,607. This is a profit of $17,607 over 8 years and amounts to a compound annual growth rate (CAGR) of 13.89%.

With a $10,000 investment in MDY, the end total would have been $25,120. This equates to a $15,120 profit over 8 years and a compound annual growth rate (CAGR) of 13.29%.

USMV’s CAGR is 0.61 percentage points higher than that of MDY and as a result, would have yielded $2,487 more on a $10,000 investment. Thus, USMV outperformed MDY by 0.61% annually.


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