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VBR vs. MDY: What’s The Difference?

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

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

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

Summary

VBRMDY
NameVanguard Small-Cap Value Index Fund ETF SharesSPDR S&P MIDCAP 400 ETF Trust
CategorySmall ValueMid-Cap Blend
IssuerVanguardSPDR State Street Global Advisors
AUM48.08B21.31B
Avg. Return12.28%13.29%
Div. Yield1.6%0.94%
Expense Ratio0.07%0.23%

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) is a Small Value fund that is issued by Vanguard. It currently has 48.08B total assets under management and has yielded an average annual return of 12.28% over the past 10 years. The fund has a dividend yield of 1.6% with an expense ratio of 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%.

VBR’s dividend yield is 0.66% higher than that of MDY (1.6% vs. 0.94%). Also, VBR yielded on average 1.01% less per year over the past decade (12.28% vs. 13.29%). The expense ratio of VBR is 0.16 percentage points lower than MDY’s (0.07% vs. 0.23%).

Fund Composition

Industry Exposure

VBR vs. MDY - Industry Exposure

VBRMDY
Technology8.39%14.74%
Industrials18.44%17.88%
Energy5.15%2.52%
Communication Services1.77%1.63%
Utilities3.65%2.84%
Healthcare7.16%11.17%
Consumer Defensive4.36%4.2%
Real Estate10.92%9.66%
Financial Services20.04%15.2%
Consumer Cyclical13.82%14.89%
Basic Materials6.31%5.27%

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has the most exposure to the Financial Services sector at 20.04%. This is followed by Industrials and Consumer Cyclical at 18.44% and 13.82% respectively. Utilities (3.65%), Consumer Defensive (4.36%), and Energy (5.15%) only make up 13.16% of the fund’s total assets.

VBR’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.31%, 7.16%, 8.39%, 10.92%, and 13.82%.

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%.

VBR is 4.84% more exposed to the Financial Services sector than MDY (20.04% vs 15.2%). VBR’s exposure to Industrials and Consumer Cyclical stocks is 0.56% higher and 1.07% lower respectively (18.44% vs. 17.88% and 13.82% vs. 14.89%). In total, Utilities, Consumer Defensive, and Energy also make up 3.60% more of the fund’s holdings compared to MDY (13.16% vs. 9.56%).

Holdings

VBR - Holdings

VBR HoldingsWeight
Diamondback Energy Inc0.55%
VICI Properties Inc Ordinary Shares0.54%
IDEX Corp0.54%
Nuance Communications Inc0.5%
Molina Healthcare Inc0.48%
Signature Bank0.46%
Novavax Inc0.44%
Howmet Aerospace Inc0.44%
Apollo Global Management Inc Class A0.42%
Brown & Brown Inc0.41%

VBR’s Top Holdings are Diamondback Energy Inc, VICI Properties Inc Ordinary Shares, IDEX Corp, Nuance Communications Inc, and Molina Healthcare Inc at 0.55%, 0.54%, 0.54%, 0.5%, and 0.48%.

Signature Bank (0.46%), Novavax Inc (0.44%), and Howmet Aerospace Inc (0.44%) have a slightly smaller but still significant weight. Apollo Global Management Inc Class A and Brown & Brown Inc are also represented in the VBR’s holdings at 0.42% and 0.41%.

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%.

Risk Analysis

VBRMDY
Mean Return1.081.08
R-squared82.286.66
Std. Deviation18.3716.83
Alpha-5.09-4.1
Beta1.231.15
Sharpe Ratio0.670.73
Treynor Ratio9.159.97

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has a R-squared of 82.2 with a Alpha of -5.09 and a Standard Deviation of 18.37. Its Beta is 1.23 while VBR’s Mean Return is 1.08. Furthermore, the fund has a Treynor Ratio of 9.15 and a Sharpe Ratio of 0.67.

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 Standard Deviation of 16.83. Its Beta is 1.15 while MDY’s Alpha is -4.1. Furthermore, the fund has a Sharpe Ratio of 0.73 and a Treynor Ratio of 9.97.

VBR’s Mean Return is 0.00 points lower than that of MDY and its R-squared is 4.46 points lower. With a Standard Deviation of 18.37, VBR is slightly more volatile than MDY. The Alpha and Beta of VBR are 0.99 points lower and 0.08 points higher than MDY’s Alpha and Beta.

Performance

Annual Returns

VBR vs. MDY - Annual Returns

YearVBRMDY
20205.82%13.51%
201922.76%25.86%
2018-12.22%-11.28%
201711.79%15.89%
201624.8%20.33%
2015-4.67%-2.4%
201410.55%9.42%
201336.57%33.08%
201218.78%17.58%
2011-4.05%-1.99%
201024.97%26.17%

VBR had its best year in 2013 with an annual return of 36.57%. VBR’s worst year over the past decade yielded -12.22% and occurred in 2018. In most years the Vanguard Small-Cap Value Index Fund ETF Shares provided moderate returns such as in 2014, 2017, and 2012 where annual returns amounted to 10.55%, 11.79%, and 18.78% 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

VBR vs. MDY - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VBR$10,000$32,61112.28%
MDY$10,000$36,52413.29%

A $10,000 investment in VBR would have resulted in a final balance of $32,611. This is a profit of $22,611 over 11 years and amounts to a compound annual growth rate (CAGR) of 12.28%.

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%.

VBR’s CAGR is 1.01 percentage points lower than that of MDY and as a result, would have yielded $3,913 less on a $10,000 investment. Thus, VBR performed worse than MDY by 1.01% annually.


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