The Vanguard Small-Cap Index Fund ETF Shares (VB) and the SPDR S&P MIDCAP 400 ETF Trust (MDY) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and MDY is a SPDR State Street Global Advisors Mid-Cap Blend fund. So, what’s the difference between VB and MDY? And which fund is better?
The expense ratio of VB is 0.18 percentage points lower than MDY’s (0.05% vs. 0.23%). VB also has a higher exposure to the technology sector and a higher standard deviation. Overall, VB has provided higher returns than MDY over the past ten years.
In this article, we’ll compare VB vs. MDY. We’ll look at performance and industry exposure, as well as at their fund composition and annual returns. Moreover, I’ll also discuss VB’s and MDY’s risk metrics, portfolio growth, and holdings and examine how these affect their overall returns.
|Name||Vanguard Small-Cap Index Fund ETF Shares||SPDR S&P MIDCAP 400 ETF Trust|
|Category||Small Blend||Mid-Cap Blend|
|Issuer||Vanguard||SPDR State Street Global Advisors|
The Vanguard Small-Cap Index Fund ETF Shares (VB) is a Small Blend fund that is issued by Vanguard. It currently has 137.72B total assets under management and has yielded an average annual return of 14.25% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 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%.
VB’s dividend yield is 0.20% higher than that of MDY (1.14% vs. 0.94%). Also, VB yielded on average 0.97% more per year over the past decade (14.25% vs. 13.29%). The expense ratio of VB is 0.18 percentage points lower than MDY’s (0.05% vs. 0.23%).
The Vanguard Small-Cap Index Fund ETF Shares (VB) has the most exposure to the Technology sector at 16.85%. This is followed by Industrials and Healthcare at 16.11% and 14.34% respectively. Communication Services (2.4%), Energy (3.67%), and Consumer Defensive (4.14%) only make up 10.21% of the fund’s total assets.
VB’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Healthcare stocks at 4.63%, 9.56%, 13.03%, 13.06%, and 14.34%.
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%.
VB is 2.11% more exposed to the Technology sector than MDY (16.85% vs 14.74%). VB’s exposure to Industrials and Healthcare stocks is 1.77% lower and 3.17% higher respectively (16.11% vs. 17.88% and 14.34% vs. 11.17%). In total, Communication Services, Energy, and Consumer Defensive also make up 1.86% more of the fund’s holdings compared to MDY (10.21% vs. 8.35%).
|Charles River Laboratories International Inc||0.34%|
|Diamondback Energy Inc||0.31%|
|VICI Properties Inc Ordinary Shares||0.3%|
VB’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.34%, 0.32%, 0.32%, 0.32%, and 0.31%.
Diamondback Energy Inc (0.31%), VICI Properties Inc Ordinary Shares (0.3%), and IDEX Corp (0.3%) have a slightly smaller but still significant weight. Entegris Inc and Novavax Inc are also represented in the VB’s holdings at 0.3% and 0.29%.
|Molina Healthcare Inc||0.63%|
|Fair Isaac Corp||0.62%|
|XPO Logistics Inc||0.61%|
|SolarEdge Technologies Inc||0.61%|
|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%.
The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Standard Deviation of 17.82 with a Treynor Ratio of 10.15 and a Alpha of -4.02. Its R-squared is 85.03 while VB’s Sharpe Ratio is 0.74. Furthermore, the fund has a Mean Return of 1.15 and a Beta of 1.21.
The SPDR S&P MIDCAP 400 ETF Trust (MDY) has a Standard Deviation of 16.83 with a Mean Return of 1.08 and a Alpha of -4.1. Its R-squared is 86.66 while MDY’s Treynor Ratio is 9.97. Furthermore, the fund has a Sharpe Ratio of 0.73 and a Beta of 1.15.
VB’s Mean Return is 0.07 points higher than that of MDY and its R-squared is 1.63 points lower. With a Standard Deviation of 17.82, VB is slightly more volatile than MDY. The Alpha and Beta of VB are 0.08 points higher and 0.06 points higher than MDY’s Alpha and Beta.
VB had its best year in 2013 with an annual return of 37.8%. VB’s worst year over the past decade yielded -9.3% and occurred in 2018. In most years the Vanguard Small-Cap Index Fund ETF Shares provided moderate returns such as in 2017, 2012, and 2016 where annual returns amounted to 16.24%, 18.22%, and 18.31% 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.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VB would have resulted in a final balance of $39,734. This is a profit of $29,734 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.25%.
With a $10,000 investment in MDY, the end total would have been $36,524. This equates to a $26,524 profit over 11 years and a compound annual growth rate (CAGR) of 13.29%.
VB’s CAGR is 0.97 percentage points higher than that of MDY and as a result, would have yielded $3,210 more on a $10,000 investment. Thus, VB outperformed MDY by 0.97% annually.
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