The Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) and the SPDR S&P MIDCAP 400 ETF Trust (MDY) are both among the Top 100 ETFs. VEA is a Vanguard Foreign Large Blend fund and MDY is a SPDR State Street Global Advisors Mid-Cap Blend fund. So, what’s the difference between VEA and MDY? And which fund is better?
The expense ratio of VEA is 0.18 percentage points lower than MDY’s (0.05% vs. 0.23%). VEA also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VEA has provided lower returns than MDY over the past ten years.
In this article, we’ll compare VEA vs. MDY. We’ll look at performance and holdings, as well as at their industry exposure and fund composition. Moreover, I’ll also discuss VEA’s and MDY’s portfolio growth, annual returns, and risk metrics and examine how these affect their overall returns.
Summary
| VEA | MDY | |
| Name | Vanguard FTSE Developed Markets Index Fund ETF Shares | SPDR S&P MIDCAP 400 ETF Trust |
| Category | Foreign Large Blend | Mid-Cap Blend |
| Issuer | Vanguard | SPDR State Street Global Advisors |
| AUM | 157.48B | 21.31B |
| Avg. Return | 7.05% | 13.29% |
| Div. Yield | 2.49% | 0.94% |
| Expense Ratio | 0.05% | 0.23% |
The Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 157.48B total assets under management and has yielded an average annual return of 7.05% over the past 10 years. The fund has a dividend yield of 2.49% 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%.
VEA’s dividend yield is 1.55% higher than that of MDY (2.49% vs. 0.94%). Also, VEA yielded on average 6.24% less per year over the past decade (7.05% vs. 13.29%). The expense ratio of VEA is 0.18 percentage points lower than MDY’s (0.05% vs. 0.23%).
Fund Composition
Industry Exposure
| VEA | MDY | |
| Technology | 11.67% | 14.74% |
| Industrials | 15.47% | 17.88% |
| Energy | 4.17% | 2.52% |
| Communication Services | 5.41% | 1.63% |
| Utilities | 3.1% | 2.84% |
| Healthcare | 10.6% | 11.17% |
| Consumer Defensive | 8.61% | 4.2% |
| Real Estate | 4.04% | 9.66% |
| Financial Services | 17.39% | 15.2% |
| Consumer Cyclical | 11.31% | 14.89% |
| Basic Materials | 8.24% | 5.27% |
The Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) has the most exposure to the Financial Services sector at 17.39%. This is followed by Industrials and Technology at 15.47% and 11.67% respectively. Real Estate (4.04%), Energy (4.17%), and Communication Services (5.41%) only make up 13.62% of the fund’s total assets.
VEA’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Healthcare, Consumer Cyclical, and Technology stocks at 8.24%, 8.61%, 10.6%, 11.31%, and 11.67%.
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%.
VEA is 2.19% more exposed to the Financial Services sector than MDY (17.39% vs 15.2%). VEA’s exposure to Industrials and Technology stocks is 2.41% lower and 3.07% lower respectively (15.47% vs. 17.88% and 11.67% vs. 14.74%). In total, Real Estate, Energy, and Communication Services also make up 0.19% less of the fund’s holdings compared to MDY (13.62% vs. 13.81%).
Holdings
| VEA Holdings | Weight |
| Nestle SA | 1.5% |
| Samsung Electronics Co Ltd | 1.4% |
| ASML Holding NV | 1.16% |
| Roche Holding AG | 1.1% |
| Toyota Motor Corp | 0.92% |
| LVMH Moet Hennessy Louis Vuitton SE | 0.84% |
| Novartis AG | 0.82% |
| Shopify Inc A | 0.7% |
| AstraZeneca PLC | 0.67% |
| SAP SE | 0.66% |
VEA’s Top Holdings are Nestle SA, Samsung Electronics Co Ltd, ASML Holding NV, Roche Holding AG, and Toyota Motor Corp at 1.5%, 1.4%, 1.16%, 1.1%, and 0.92%.
LVMH Moet Hennessy Louis Vuitton SE (0.84%), Novartis AG (0.82%), and Shopify Inc A (0.7%) have a slightly smaller but still significant weight. AstraZeneca PLC and SAP SE are also represented in the VEA’s holdings at 0.67% and 0.66%.
| 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%.
Performance
Annual Returns
| Year | VEA | MDY |
| 2020 | 10.29% | 13.51% |
| 2019 | 22.08% | 25.86% |
| 2018 | -14.47% | -11.28% |
| 2017 | 26.44% | 15.89% |
| 2016 | 2.51% | 20.33% |
| 2015 | -0.21% | -2.4% |
| 2014 | -5.71% | 9.42% |
| 2013 | 22.12% | 33.08% |
| 2012 | 18.6% | 17.58% |
| 2011 | -12.57% | -1.99% |
| 2010 | 8.47% | 26.17% |
VEA had its best year in 2017 with an annual return of 26.44%. VEA’s worst year over the past decade yielded -14.47% and occurred in 2018. In most years the Vanguard FTSE Developed Markets Index Fund ETF Shares provided moderate returns such as in 2016, 2010, and 2020 where annual returns amounted to 2.51%, 8.47%, and 10.29% 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
| Fund | Initial Balance | Final Balance | CAGR |
| VEA | $10,000 | $19,290 | 7.05% |
| MDY | $10,000 | $36,524 | 13.29% |
A $10,000 investment in VEA would have resulted in a final balance of $19,290. This is a profit of $9,290 over 11 years and amounts to a compound annual growth rate (CAGR) of 7.05%.
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%.
VEA’s CAGR is 6.24 percentage points lower than that of MDY and as a result, would have yielded $17,234 less on a $10,000 investment. Thus, VEA performed worse than MDY by 6.24% annually.
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