Skip to content

VCIT vs. MDY: What’s The Difference?

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

The expense ratio of VCIT is 0.18 percentage points lower than MDY’s (0.05% vs. 0.23%). VCIT is mostly comprised of BBB bonds while MDY has a high exposure to the industrials sector. Overall, VCIT has provided lower returns than MDY over the past ten years.

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

Introduction To Mutual Funds
Introduction To Mutual Funds
TIP: Keep track of all your investments with Personal Capital. I use this amazing tool to aggregate all investments in one place and make sure I'm on track to financial freedom. Oh, and did I mention it's free? Try it out here (link to Personal Capital).

Summary

VCITMDY
NameVanguard Intermediate-Term Corporate Bond Index Fund ETF SharesSPDR S&P MIDCAP 400 ETF Trust
CategoryCorporate BondMid-Cap Blend
IssuerVanguardSPDR State Street Global Advisors
AUM48.39B21.31B
Avg. Return5.84%13.29%
Div. Yield2.33%0.94%
Expense Ratio0.05%0.23%

The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) is a Corporate Bond fund that is issued by Vanguard. It currently has 48.39B total assets under management and has yielded an average annual return of 5.84% over the past 10 years. The fund has a dividend yield of 2.33% 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%.

VCIT’s dividend yield is 1.39% higher than that of MDY (2.33% vs. 0.94%). Also, VCIT yielded on average 7.45% less per year over the past decade (5.84% vs. 13.29%). The expense ratio of VCIT is 0.18 percentage points lower than MDY’s (0.05% vs. 0.23%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Holdings

VCIT - Holdings

VCIT Bond SectorsWeight
BBB55.28%
A37.85%
AA5.22%
AAA1.57%
Below B0.08%
Others0.0%
B0.0%
BB0.0%
US Government0.0%

VCIT’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and Below B at 55.28%, 37.85%, 5.22%, 1.57%, and 0.08%. The fund is less weighted towards Others (0.0%), B (0.0%), and BB (0.0%) rated bonds.

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%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

VCITMDY
Mean Return0.441.08
R-squared63.1886.66
Std. Deviation5.0816.83
Alpha0.89-4.1
Beta1.351.15
Sharpe Ratio0.910.73
Treynor Ratio3.439.97

The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) has a Mean Return of 0.44 with a Treynor Ratio of 3.43 and a Alpha of 0.89. Its Beta is 1.35 while VCIT’s R-squared is 63.18. Furthermore, the fund has a Sharpe Ratio of 0.91 and a Standard Deviation of 5.08.

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

VCIT’s Mean Return is 0.64 points lower than that of MDY and its R-squared is 23.48 points lower. With a Standard Deviation of 5.08, VCIT is slightly less volatile than MDY. The Alpha and Beta of VCIT are 4.99 points higher and 0.20 points higher than MDY’s Alpha and Beta.

FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!

Performance

Annual Returns

VCIT vs. MDY - Annual Returns

YearVCITMDY
20209.55%13.51%
201913.97%25.86%
2018-1.75%-11.28%
20175.5%15.89%
20165.3%20.33%
20150.88%-2.4%
20147.47%9.42%
2013-1.8%33.08%
201211.36%17.58%
20117.94%-1.99%
201010.65%26.17%

VCIT had its best year in 2019 with an annual return of 13.97%. VCIT’s worst year over the past decade yielded -1.8% and occurred in 2013. In most years the Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares provided moderate returns such as in 2017, 2014, and 2011 where annual returns amounted to 5.5%, 7.47%, and 7.94% 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

VCIT vs. MDY - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VCIT$10,000$17,4395.84%
MDY$10,000$28,94813.29%

A $10,000 investment in VCIT would have resulted in a final balance of $17,439. This is a profit of $7,439 over 10 years and amounts to a compound annual growth rate (CAGR) of 5.84%.

With a $10,000 investment in MDY, the end total would have been $28,948. This equates to a $18,948 profit over 10 years and a compound annual growth rate (CAGR) of 13.29%.

VCIT’s CAGR is 7.45 percentage points lower than that of MDY and as a result, would have yielded $11,509 less on a $10,000 investment. Thus, VCIT performed worse than MDY by 7.45% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!

2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.

5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply

Your email address will not be published.